Quote:
Originally Posted by Sylvanfan
The income numbers are likely house hold income.
As for the 18% interest rates in the 1980's the country was in such a different place demographically you really can't compare it. It was an era where you simply had 4 kids all trying to borrow money from their 2 parents to start out in life. Going forward the demographics are much more balanced.
Also with the Bank of Canada now controlling interest rates they don't just arbitrarily set rates, they do it to keep inflation at certain levels. If they have to increase the rates to a level of 8%, it's because there has been enough inflation to make this a requirement. So things like incomes and the price of everything else will have or should have increased too.
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Maybe I'm wrong on this, but isn't kind of clear that the government lowered to the interest rates to spur growth? Or prevent a complete collapse of the economy? Sounds like arbitrarily setting the rates to me... Obviously they do it to keep inflation at certain levels but they lowered to encourage growth and prevent disaster...
I agree I don't think they will come in and just set the rates at 8 or 9% for no real reason, but I simply cannot understand how anyone thinks the interest rates will not gradually increase to somewhere betwen 6 and 8%, seems inevitable to me...
I agree with you about the 1980's interest rates, different times.
Right now we are at an overnight rate of 0.25, RBC is predicting by the end of 2011 we well be at 3.5%