money supply and inflation

that why interest rates are low

Supply= too much money
Demand= still there but too many sources.
Result = low rates

While I was receiving 10% on investments a few years ago, now at an all time low less than 2%. A major concern for me and many.
A friend who sold his farm 3 years ago for $500,000 was getting between $40,000 and 50,000 per year to live on, A fine life style. Now he gets perhaps $7500 to 10,000 and must change lifestyle dramatically. Cost of living last year in Canada was up 3%.
 

mondongo

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Jan 1, 2002
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low rates

short term rates have come down quite a bit since the US Fed started to trim their rates...in an economy like the US, once the money supply has grown sufficiently (which i hope has already happened), and if there is no deflation, then the direction of short term rates from this point on should be higher...which means we'll be out of the recession soon
 

Pepe

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Jan 1, 2002
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Re: low rates

mondongo said:
short term rates have come down quite a bit since the US Fed started to trim their rates...in an economy like the US, once the money supply has grown sufficiently (which i hope has already happened), and if there is no deflation, then the direction of short term rates from this point on should be higher...which means we'll be out of the recession soon

I hope you are right, Tripas. Nowadays there is not much difference between a bank and a mattress.
 

mondongo

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Jan 1, 2002
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news from central bank

In Wednesday's DR1 Daily News there was an article from the Central bank and treasury basically backing up my argument. The Treasury will issue short term bills in DR$ to try to take out some of the DR$ in circulation.

http://www.dr1.com/news/2002/dnews021302.shtml

I would look closely at these treasury bills as an investment vehicle. If it holds true as in the US, these should be of better quaility thatn commenrcial paper.
 

Golo100

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Jan 5, 2002
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Mondongo

While the Central Bank notes are a safer ivestment than commercial paper, their yield is much lower. The last time I had some Central Bank notes back in 1993-94 they were paying 14% while the commercial side was doing 20%.

I assume they will stick closer to the commercial rate of about 16-17% now for short term certificates of between 30-180 days. I stick to 90 day certificates always. They are very safe, and of course productive. I doubt I will venture in C.B. certificates. I hate to lose money for just safety's sake. Besides, the Central Bank has no automatic deposit of interests in a personal account and use checks to pay the interest. If you need the interest in the first three days of the month you have to cope with a big line at the bank. That's not my style.

Those with liquidity can always make a killing in times of economic trouble in DR. As the dollars dry up, the peso goes up in price, thus interest rates. The rise in interest rates is always higher than the devaluation of the peso.

TW
 

mondongo

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Jan 1, 2002
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TW

TW, when you exchange large amounts (>US$1000) of DR$ to US$ and vice versa, is there some automated (computerized?) method of of determining where you can get the best rates?

mondongo