8 votes

Who is buying all the debt?

Starting with your first question, why would anyone want to lend money at such a low interest rate?: Look at the loan as an investment Any investment has a risk/return profile. Getting higher returns ...
yoozer8's user avatar
  • 9,514
6 votes

Who is buying all the debt?

To a large extent, central banks. In order to stimulate economies, the central banks are lending out money at interest rates that are well below the rate of inflation. If you are a bank, and you can ...
Simon B's user avatar
  • 10.4k
5 votes

Why do banks park their money at the european central bank instead of buying stocks?

Regulatory restrictions? Yes. You should read more about fractional reserve banking. Banks lend away the money people have deposited into the bank to yield interest. However, sometimes many ...
juhist's user avatar
  • 6,733
5 votes

Why are bank rates based on the federal interest rate?

From what I have read, the Federal Reserve sets the "key rate", which is the rate at which banks can borrow money from the Reserve. This is called the discount rate, but it is mostly irrelevant, as ...
Brythan's user avatar
  • 21k
4 votes

Who is buying all the debt?

Those low interest rate home loans are tied in with the fixed income markets. In that context the question is not so much "how does my 30-year home loan have an interest rate lower than inflation&...
C8H10N4O2's user avatar
  • 1,406
4 votes
Accepted

How can one maximize the value of their money when their country is adopting the Euro?

Given the precedent of Greece (where Euro was introduced after the initial rollout): the European Council will determine an exchange rate ahead of time(should be months)1 Banks will accept the ...
Leon's user avatar
  • 4,107
4 votes

Why are bank rates based on the federal interest rate?

I'll break what you wrote into two questions: A) Why do banks base loan rates on a benchmark provided by the fed? Banks like to decompose your interest rate into two components: The prevailing ...
farnsy's user avatar
  • 15.1k
4 votes

Why do banks park their money at the european central bank instead of buying stocks?

Because banking customers wouldn't be happy if their "safe" deposits lost value. Bank's aren't in the business of investing their money - they are in the business of providing a "safe" place for ...
D Stanley's user avatar
  • 135k
4 votes
Accepted

How has the Fed been reducing its balance sheet?

The balance sheet slightly increased recently, but the general trend has been toward smaller. You can see the balance sheet (and other great data) on the website for the St. Louis Federal Reserve: ...
Charles Fox's user avatar
  • 2,779
3 votes

How can one maximize the value of their money when their country is adopting the Euro?

See for example https://en.wikipedia.org/wiki/Deutsche_Mark At the day of currency conversion, they set an irrevocable (fixed) exchange rate between the old currency and the Euro. The old currency ...
Hilmar's user avatar
  • 7,860
3 votes
Accepted

How can I estimate future pension pot limit?

Predicting government regulation in the near future is hard enough. Predicting what the government will do 25 years out is so hard I'm not sure there is a good answer to your question. Your ...
rhaskett's user avatar
  • 6,608
2 votes

Why do banks park their money at the european central bank instead of buying stocks?

In the US, banks do invest in the stock market sometimes - just like they lend money to people sometimes. However, they can only invest or lend some of their money, and they have to be very careful ...
Joe's user avatar
  • 35.8k
2 votes

Why do banks park their money at the european central bank instead of buying stocks?

Because stocks are only safe over very long-term periods. The bank has to prepare for the market to potentially downturn - significantly. And it needs to guarantee it retains enough cash value in ...
Harper - Reinstate Monica's user avatar
2 votes
Accepted

How does QE reduce long-term interest rates?

"Long-term securities" (i.e. bonds) work like this: You're a big company wanting to expand. You write a bunch of IOU notes that say "I'll pay you back $100 in 10 years". Then you ...
user253751's user avatar
  • 2,839
1 vote

What determined the "cost of borrowing money" or the interest rate in a gold-based economy

In an economy that uses gold as a currency, the amount of gold that is circulating determines inflation or deflation and that obviously determines the interest rate. Of course a lender wants more than ...
S Spring's user avatar
  • 3,572
1 vote

What determined the "cost of borrowing money" or the interest rate in a gold-based economy

In the modern economy, the central bank decides the cost of borrowing money using interest rates No, it does not. It provides a lender of last resort facility which TENDS to limit interest rates, ...
TomTom's user avatar
  • 11.5k
1 vote

How much percent of the total Euro Zone Euros was artificially added through systems like QE this century?

According to the European Central Bank, the money supply for Jan 2020 is 13,052 billion euros. https://www.ecb.europa.eu/stats/money_credit_banking/monetary_aggregates/html/index.en.html
Croves's user avatar
  • 159

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