The massive reduction of interest rates over the last 28 years has led
From outsourcingbusiness@yahoo.com@21:1/5 to All on Sun Mar 1 03:17:46 2020
In the US the reduction of interest rates from 1992 onwards did lead to an economic boom which lasted almost 15 years but the peactically zero cost of borrowing ( one or even two percent is virtually nothing when compared to US treasuries in the 1980s at
12% and even later on in the late 1980s at about 7 or 8%.
Higher interest costs do have positive effects. They instill financial responsibility amongst Govts that tend to borrow much less. They also instill responsibility amongst citizens who tend to save more and it also instills responsibility in business.
This virtual reduction to zero ( one or two percent in many developed countries is what has led to such huge amounts of Govt borrowing that in just 12 years from 1992 to 2004 Govt borrowing more than tripled or even went up 3.5 times.
That is the amount of Govt borrowing over decades ever since the system of Govt borrowing started in the US. This decades of borrowing was around 2 trillion dollars ( give or take a little) since its inception decades earlier to 1992. In 12 years it went
up to about 7.5 trillion dollars or 3.5 times in just 12 years. Than went up to around 9.5 or 10 trillion dollars by 2008. Another trillion or trillion and a half to resolve the 2008 colllapse of the US financial system due to a worldwide collapse
triggered by massive overleveraging.
In the last 12 years it has gone up about two to two and a half times.
Today it is around 20 to 21 trillion dollars. It may eve be 22 trillion dollars.
Some estimates put the borrowing at 8 trillion in 2008 and 16 trillion or double by 2016. So President obama virtually doubled the already massive debt into HUGE levels. And if we are already past 22 trillion dollars than we are continuing on this path.
But percentagewise the fiscal prudence shown by George Bush from 2000 to 2008 was not as bad as Clinton and even Trumps borrowing in percentage terms has not been as bad as Obamas. If the US borrowing crosses 30 trillion dollars by 2024 with Trump still
President in 2024 than you could say the borrowing may be as bad in percentage terms as Obama. However even than if the economy has performed much better under Trump and unemployment is at its lowest levels ever than even if the borrowing under Trump
would have been percentage wise as high as Obamas the borrowing would have been more positive and with much better results.