nathan tankus wrote: > "You can't lower nominal interest rates past zero". I think there's > actually some technical disputes about that operationally. In any > case, I don't think it would be desirable.
Nominal interest rates have gone negative for T-bills on occasion. That's because they were seen as safer than other assets in very turbulent times (e.g., 2008). Instead of buying T-bills in order to get interest, finance folk were paying fees to the Treasury to get insurance. me: > To some extent the conflict between the anti-inflation "hawks" > (Volcker) and the anti-inflation "doves" (e.g., William Miller, who > preceded him as the Fed Head) that reflects the division between > banking/financial capitalists and industrial capitalists. (Lefties > usually ignore that intra-class conflict, focusing instead on the > inter-class conflict.)" Nathan: > I'm not sure about the truth of this, at least for the 1980's. the > volcker raising of interest rates is what turned the savings and loans > industry insolvent and then led them to push for deregulation and > ultimately go the massive financial fraud route. ... Due to the incorporation of inflationary expectations into nominal interest rates, they were already soaring -- and the basis for the S&L crisis was being set -- before Volcker. It's true that Volcker likely made that crisis even worse by pushing them higher, but from the point of view of the leaders of financial capital, SOMETHING HAD TO BE DONE about what was perceived to be worsening inflation. And inflation generally did rise during the 1970s (except during 1975-76 as unemployment rose, which just proved the financiers' point). And note that the S&L sector was seen as less important than the commercial banks, which had more influence on Fed policy (especially those which were member banks). Finally, this was the beginning of financial triumphalism, in which disasters like that of the S&L sector weren't considered to be possible (especially by the S&L people themselves. (Of course, if the impossible _did_ happen, there would be a bail-out, as indeed there was.) Of course, this isn't the whole story. For example, one orthodox economist measured the rate of profit and found that it had fallen during the 1970s. He thus proposed a full-scale neoliberal program. (See Liebling, Herman I. 1980. U.S. Corporate Profitability and Capital Formation: Are Rates of Return Sufficient? New York: Pergammon.) -- Jim Devine / "In science one tries to tell people, in such a way as to be understood by everyone, something that no one ever knew before. But in poetry, it's the exact opposite." -- Paul Dirac _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
