Comments: Pendulum still swinging on interest rate cuts

Any cut in interest rates will only work by increasing the debt burden: isn't there a danger of us becoming addicted to this medicene, given China, immigration and the Internet are all structural changes limiting inflation? Is 2% CPI inflation still a realistic target, or have circumstances changed since 1997? (Historically there have been prolonged periods of lower inflation and deflation.)

In Keynesian theory the government borrowed to spend our way out of recession: now consumers are expected to take its place when their debt is already at record levels! Whose interests does this economy serve? Why should consumers get into more debt to make the prices they pay more expensive - paying interest and inflated prices? In stimulating the economy to keep it at full capacity lenders are being encourgaed to lend and others to borrow, and to hell with the risk. Repossessions are already rising...

Posted by David Goldfinch at February 5, 2006 06:43 PM