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Why Low Interest Rates Could Also Encourage Saving

Saturday, September 18, 2010 - 6:48 AM
One reason the Fed cuts interest rates is to spur spending which spurs growth. However, as this Economist article describes, it can increase savings instead of spending. The article points out what happened in Japan:
Here again, Japan may provide the template. Its investors have been so eager to save that they have been willing to buy government bonds even with nominal yields of just 1-2%.

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Ken TuminKen Tumin5,441 posts since
Nov 29, 2009
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