The discussion of interest rates has continued to avoid any reference to the money that is withdrawn from any respective monitory system when interest rates are artificially low. I define artificially low when the rate of return is below the rate of real inflation. Real inflation includes all the parameters that are intentionally excluded from the "market basket" like the cost of government, taxes, fees, fuel, and fuel. In the us, for example, over a trillion dollars in bank deposits being used for loans/collateral by banks at almost no cost. for every 1% increase in interest, $10 billion would circulate in the economy with it related multiplier effect.

The failure to pay realistic interest is a major factor in the depressed economy and I suspect that the economy cannot recover unless this situation is corrected.

It is madness when the rich get all the phony money. As if we don't need it more!

Precisely the reason Wall Street Investment Banks should have been permitted to fail, the huge amount needed to save them was taken from main street. For jobs, education, infrastructure you name it. All banks would not have failed.
14 trillion is a massive amount, try it, you'll have trouble holding the zeros in your brain,

The whole "faith based" Fiat money system with 95% of the supply not even that but conjured up computer creations on their computers & created by indebting everyone could have been ended during the "crisis" when the Banks were weak. They could have been nationalized worldwide & a whole new monetary system could have been set up. It was not to be, the Political serfs of the banks reacted by making them stronger & bigger than they were & millions lost their homes & savings. I used to wonder how such a patently absurd system could survive even loose scrutiny until I realized that Religion which is nothing more than faith based absurdity selling eternal life based on myth is alive & well in the age of DNA & space travel. We, at least, the unwashed are just plain stupid & the elites benefit from these things so the beat goes on!

I've tried for over an hour to post but this spam filter seems unable to accept my post.

I agree with Krugman's points but can someone explain why it is bad if the yield goes up on a bond? Seems that would make people want to invest in it. There's an assumption or fact about bonds that I need to learn about. Can someone explain to me why the graph showing a line going up in rates is bad?

Rates going up means the cost of selling the bond becomes more expensive, and the value from selling it goes down.

So, rising interest rates mean the bond issuer is having trouble selling his bonds.

The Point is: austerity, which was supposed to encourage bond buyers, has had the opposite effect. Why? Because the seller's economy (Ireland) is doing more poorly, i.e. is worth less, because of the austerity.

The rants about "fiat" currency are just that. If we went back to gold and silver, there would not be enough money in the world and world trade would collapse, as would domestic markets.

Borrowing to finance recovery is like borrowing to build a new factory when you know demand for your product will grow. You may owe money now, but you will recoup more money later.

When a country borrows in a depression, to create jobs and rebuild infrastructure, that is INVESTMENT, not frivolous spending, and its return will be highly positive--down the road.

The problem is: under Bush we borrowed and spent for frivolous reasons BEFORE the crash. So we started with a huge overload of unjustified debt.

The common man still takes the hit when big business loses, and we still lose when big business wins. It's time for little boys with enormous egos to grow up and become
responsible or take the fall for not doing so. And in case you didn't know - "Religion is what keeps the poor from murdering the rich." - Napoleon Bonaparte.

Poor people are neither as poor nor as stupid as you imagine.

If the poor person spends all her money because s(he) has no choice in the matter, s(he) may nevertheless have a clear idea what to do with a surplus if one were available.

Many people on the "poor" end of the American spectrum, even now, still have some disposable income, part of which they might save or invest if they had a trustworthy means of doing so.

Even a rock-bottom, paycheck-to-paycheck, strapped poor person notices inflation when her income buys less and less than it once did.

Yours is the most grotesquely patronizing purported defense of the poor that I have ever seen.

Debt forgiveness in the US is the only way out of this mess. Until that happens, any attempts to continue paying off derivatives will destroy the world's economy. The 'brightest guys in the room' (just like with LTCM) have wrecked the entire world economy since derivative debt, totalling over $1.14 Quadrillion USD (according to Steve Pizzo's article 'Follow The Numbers') can never be paid off without empoverishing the rest of the world while enriching a small elite.

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