Low Interest Rates & Shadowy Future of the Banks
Neither the inflation is improving nor do the data suggest it will
, ruling out the possibility of increased consumer spending & rise in interest rates. For example The Bank of England is struggling to cut the deficit and is relying on actions like cuts in spending and tax increases, which are undesirable in prevailing times. How can then the bank afford to increase the interest in the near future. With Britain's deficit nearing 12 % in 2010, it seems that future scenarios will unfold even trickier situations to handle. US economy on the other hand has a 13% budget deficit which has broken all its previous records. It has also been experiencing the juggling of different monetary and fiscal policy measures and many banks have been out of business. This has put the world's banking industry into the "what to do scenario" when every thinkable measure has been put in place with little to no impact in different parts of the world. Veteran investor and one of the richest billionaire of the US, Mr. Warren Buffett has also pointed out to different problems arising in the future due to existing & hard to get rid of scenarios. He stated that 'Legislators will correctly perceive that either raising taxes or cutting expenditures will threaten their re-election. To avoid this fate, they can opt for high rates of inflation, which never require a recorded vote and cannot be attributed to a specific action that any elected official takes.' 'Unchecked carbon emissions will likely cause icebergs to melt. Unchecked greenback emissions will certainly cause the purchasing power of currency to melt.' Only future will tell what destination the current course of actions will lead to, but a lot of sense has to be put in these actions before meaningful results are to be expected.
Low Interest Rates & Shadowy Future of the Banks
By: William King
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