[gurucat]

Interest rates after the world knows we are in the third world oil crisis.

Interest rates are a tool in hands of central banks in order to activate the economy when the growth rate is very low.

Interest rates are also a tool to control the inflation (growth of prices).

A long term continuous growth of price of oil will increase all prices, so inflation will be global, and the interest rates will raise in order to control prices, right?

When the prices grow, people becomes poorer, people is unable to buy, and money is less valued, so people spends less.

People expenses go down, and with consumption down, oil demand goes down as well and central banks have to lower again the interest rates in order to activate consumption and economy growth.

What happened in previous oil crisis? Did the prices and interest rates go up or down? For how long?

China & India growth will slow-down, and so they will use less and less petrol and they will be unable to export as transport prices will increase.

So what do you expect for China and India in 2008-2009? Will they continue growing at the same rate or they will slow-down and so the peak-oil will be postponed, and postponed year after year...

Thanks!

[heroineworshipper]

Interest? What's interest? If interest increased, people would have incentive to save money. They could start making their own decisions, getting ahead of their government mandated situation. The common good would suffer.

[gurucat]

[spoil]If interest increased, people would have incentive to save money[/spoil]

1st: prices go up
2nd: consumers are unable to save
3rd: interests grow in order to sustain prices
4th: consumers are unable to borrow money
5th: rich people gets a higher reward for the money they keep in the bank, as money is losing value otherwise
6th: the economy is in crisis with high prices
7th: to go out from the crisis, the interest rates are decreased to stimulate growth


It's a contradiction for me, like the ca trying to bit its teil, as we say in catalan.