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BigBen · 01-20-2006, 09:53 AM

Look for a textbook at the local bookstore;

The search term you are looking for is "Macroeconomics"

The book will explain investment, government purchasing, monetary theory, interest rates, saving and the really big ones : Gross Domestic Product and Balance of Trade.

Remember that the interest rate is a measure of uncertainty in the economy as well; if you are a risk, then people will charge you a higher interest rate when you borrow.

How about the unemployment rate wrapped up in there too? If there is noone looking for work (full employment) then potential employers must offer a higher wage to convince people to work for them. This naturally raises the average wage rate. This money has to come from somewhere, and the firm then raises prices (inflation) to meet this new wage rate. If interest rates are hiked, firms are less likely to borrow money and expand their business, and thus they don't offer higher wages, and may even lay-off some people if the work slows down too much. Those people then look for work, forcing the wage rate down.

There is lots of stuff going on here, including the central bank and their monetary policy (which is dictated by the government, somewhat), the average employment rate, the risk in the market, and about a thousand different variables that very smart people look at to set the interest rate.

The government has little influence over the economy other than the tax rate, the amount of government spending, the central bank setting the interest rate (and thereby influencing the amount of money in the system with a floating currency).

The government, industry, and the general public does not give two-thirds of a rat fuck that you want to get a mortgage six months from now. Nothing personal, you understand; there are 30 million other people that are making financial decisions as well. Some of those people love high interest rates.

01-20-2006, 09:53 AM	#3 (permalink)
BigBen Comedian Location: Use the search button	Look for a textbook at the local bookstore; The search term you are looking for is "Macroeconomics" The book will explain investment, government purchasing, monetary theory, interest rates, saving and the really big ones : Gross Domestic Product and Balance of Trade. Remember that the interest rate is a measure of uncertainty in the economy as well; if you are a risk, then people will charge you a higher interest rate when you borrow. How about the unemployment rate wrapped up in there too? If there is noone looking for work (full employment) then potential employers must offer a higher wage to convince people to work for them. This naturally raises the average wage rate. This money has to come from somewhere, and the firm then raises prices (inflation) to meet this new wage rate. If interest rates are hiked, firms are less likely to borrow money and expand their business, and thus they don't offer higher wages, and may even lay-off some people if the work slows down too much. Those people then look for work, forcing the wage rate down. There is lots of stuff going on here, including the central bank and their monetary policy (which is dictated by the government, somewhat), the average employment rate, the risk in the market, and about a thousand different variables that very smart people look at to set the interest rate. The government has little influence over the economy other than the tax rate, the amount of government spending, the central bank setting the interest rate (and thereby influencing the amount of money in the system with a floating currency). The government, industry, and the general public does not give two-thirds of a rat fuck that you want to get a mortgage six months from now. Nothing personal, you understand; there are 30 million other people that are making financial decisions as well. Some of those people love high interest rates. __________________ 3.141592654 Hey, if you are impressed with my memorizing pi to 10 digits, you should see the size of my penis.