Tuesday, December 14, 2004

Interest rates rise by 0.25%

 
Yikes!!!??
 
No, some people actually don't think that is scary. Actually, the new rate will be 2.25% and historically low.
 
Wait, but it went up by 25%. That sounds like a lot.
 
Not really, because of the historical significance. In fact, what is more important is a stable economy. By raising the rate now, we avoid an over heated economy with its accompany inflation.
 
A higher interest rate will also make the dollar sounder. Giving us, er what? Giving us stability against the EURO. That's true.
 
It's not the other way around. Which would be higher rates attract investment from overseas into dollars, which is just a nice, important, benefit.
 
Another benefit that remains is that American exports remain competitive.
 
See... It's all a balancing act.
 
I'm happy and you should be too.
 
Oh, the most important benefit is that for those of us who save a substantial part of our paycheck, the nestegg's inflation erosion is minimized.
 
Yeah!!! Another reason to save parts of your paycheck and/or payoff that debt you have extended yourself on for so long. But this says consumers need to spend to keep the economy. True true. Let the other guy spend, let's you and I squirrel it away.
 
Have a Merry Christmas C.A.I.R.