Zero Percent Interest? Free Money?
Doesn’t Zero Interest Mean Money is Free?
When the Fed in the states cuts their key rate to between 0 (Zero) and 0.25% I think we are no longer looking for a long term fix, we are attempting to simply “enable credit junkies”. An interest rate this low has not been seen for decades and we are now in completely uncharted waters, and I for one am wondering if Deflation and/or Depression is not the next step?
Simply making it easier to borrow money does not fix the systemic issue of too much credit, it exacerbates the situation. It is like handing an Alcoholic a bottle of Vodka and tell them not to worry about it, it will all pass.
On the bright side it did cause the Stock Markets to recover, so that is kind of cool for we investors.
Will stock prices stay down for RRSP season? Could be a real bargain buyers market by then (if the market still exists by then).
Advent Financial Calendar Box Day 18
You open the box and it is a Wii Fit! What the heck does that have to do with Personal Finance or Advent? Not much, but if anyone has one and wants to get it to me, that would be nice.
The Wii Fit actually is a very good Metaphor for not following the crowd both in investing and in personal finance. For those who are unaware, the Wii Fit is the new “it” Christmas present and does not stay on store shelves for more than 10 minutes when they are in stock.
In the past 10 years it was in vogue to build up large debt load and figure it wasn’t going to be a problem, which has turned out to be wrong. In investing buying when everyone else buys and selling when everyone sells, you are sure to end up like everyone else.
Do not join the herd, think about why you are doing what you are doing and do what you think is the right thing, not just what everyone else is doing.
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December 17th, 2008 at 11:29 AM
Hey, a Wii Fit! That’s more fun than the will hidden away earlier in the month. I like how you used it as a metaphor for following the crowd.
July 22nd, 2009 at 1:27 AM
[...] family has a play console (A Wii as I have written about earlier), but we don’t have many games for it and we haven’t [...]