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  • Mortgage interest rates are at historically low levels and have been for a long time.

  • Low interest rates are good for borrowers because it means that it costs less for them

  • to borrow. But low interest rates are bad for savers because it means that they earn

  • a lower return on their savings. Similarly, high interest rates are bad for borrowers

  • because it means that they must pay more to borrow money. But, high interest rates are

  • good for savers because it means that they earn more interest on their savings. In 1972,

  • mortgage rates were 7 percent and the average American household's debt was 76 percent

  • of its income. Mortgage interest rates rose until 1981 and then fell.

  • As mortgage rates rose, people borrowed less. And as mortgage rates fell, people borrowed

  • more. Today, mortgage interest rates are almost half of what they were in the 1970s, allowing

  • households to borrow about twice what they could afford then. Some argue that we need

  • interest rates to be low so as to encourage spending. But, low interest rates don't

  • simply encourage people to spend more. They encourage people to spend more now in exchange

  • for spending less in the future. Since borrowed money must be paid back, the additional spending

  • that goes on today will be offset by lesser spending in the future when people pay back

  • their loans. Similarly, high interest rates don't simply encourage people to spend less.

  • They encourage people to spend less now in exchange for spending more in the future.

  • So what is the right interest rate?

  • The answer is the free market interest rate. The free market interest rate is the rate

  • we get when the Federal Reserve does not interfere in financial markets. Individual borrowers

  • and savers know better than the Federal Reserve whether they should give up spending tomorrow

  • in exchange for more spending today or whether they should give up spending today in exchange

  • for more spending tomorrow. When the Federal Reserve actively manages interest rates it

  • replaces these people's judgments about what's best for them with the Federal Reserve's

  • judgment as to what's best for them. The lesson is that borrowing and saving are really

  • about deciding whether to consume more now and less later or more later and less now.

  • And these decisions are best left to individuals.

Mortgage interest rates are at historically low levels and have been for a long time.

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A2 初級

低金利は良いことなのか? (Are Low Interest Rates Good?)

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    VoiceTube に公開 2021 年 01 月 14 日
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