From an report by the KcKinsey Global Institute, the worlds largest, richest, and most prestigious management consulting firm in the world, on the effects of quantitative easing and low interest rates favored by the Fed. From 2007 to 2012, governments in the eurozone, the United Kingdom, and the United States collectively benefited by $1.6 trillion both through reduced debt-service costs and increased profits remitted from central banks (exhibit). Nonfinancial corporations—large borrowers such as governments—benefited by $710 billion as the interest rates on debt fell. Although ultra-low interest rates boosted corporate profits in the United Kingdom and the United States by 5 percent in 2012, this has not translated into higher investment, possibly as a result of uncertainty about the strength of the economic recovery, as well as tighter lending standards. Meanwhile, households in these countries together lost $630 billion in net interest income. What this quote is saying is that governments and big businesses have benefited and got richer, but it has not resulted in greater investment, which would result in greater production and job creation, ann it has hurt households who are trying to save money.
Posted on: Tue, 19 Nov 2013 20:59:30 +0000
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