Tagged: central banking

Raghuram Rajan should not decrease rates! Interest rates are not the problem, addiction to debt is!

Low interest rates will only increase more indebtedness. Bank NPAs will increase as business become more careless with money. The “captains of industry” aren’t looking at new investments. They are trying to roll over their massive debts at a lower rate, busting the health of PSU banks.


Though RBI has to keep interest rates high to prevent Indian Rupee from devaluing, Raghuram Rajan or his successor will bring rates to zero

Just in time for dubious financial products (a la Wall Street) from the new “Payment Banks”!

In an era of competitive currency devaluation, lowering interest rates would be stupid.

But, greed spares none.

In a low interest rate regime, there will be no point in investing in government securities or other fixed rate instruments. So, even conservative players such as government bodies, insure companies and regular Joes will be forced to invest in these dubious financial products that had already been seen as causing systemic destruction in 2008.