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In a liquidity trap, which we are in, it is simply economics. The interest rate will not durably go up, there are too much savings, too little demand and therefore too little investment. So unless you have a model to show how interest rates would go up, I would say the one doing the assuming is you.

It may of course be a matter of fact that high civil servants make this same assumption, but I don't understand why you would lend any credence to the claim on that basis. After all, they have been wrong about most everything lately. Why would they be right on this score?

The Hun is always either at your throat or at your feet. Winston Churchill

by r------ on Thu May 29th, 2014 at 03:32:10 PM EST
[ Parent ]
This subthread began with my suggestion that fear of a jump in interest rates (aka punishment by teh markets, whether personified by "bond vigilantes" or metaphorically represented by the "invisible hand") was a factor in Holland/the government's pusillanimous stance. That's a political comment that doesn't call for an economic model.

As to how justified that fear may be, you seem to agree there would be a rise, but it would not last long. You may be right. It doesn't change my political comment.

by afew (afew(a in a circle)eurotrib_dot_com) on Fri May 30th, 2014 at 02:06:11 AM EST
[ Parent ]
I just remarked that the "bond vigilantes " are an largely imaginary threat.
by IM on Fri May 30th, 2014 at 09:24:45 AM EST
[ Parent ]
They are very real, for any country which lacks a lender of last resort.

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Fri May 30th, 2014 at 11:11:13 AM EST
[ Parent ]
It's interesting how much top politicians (and their policies) are driven by imaginary threats. On both sides of the Rhine.
by Bernard on Fri May 30th, 2014 at 12:53:33 PM EST
[ Parent ]
Our imaginations can provide us with reasons to do or not do anything we desire. Very convenient. Convenient imaginations conjoined with convenient consciences.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Mon Jun 2nd, 2014 at 07:24:16 PM EST
[ Parent ]

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