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Unformatted text preview: are already about as low as possible, and the Fed won’t change this unless it sees a massive improvement in the economy. The thought of the economy overheating any-time soon is a fantasy at best. Long-term interest rates “reflect expected future short-term rates”, and as I said, the chance of short-term interest rates increasing in the future is very small. That being said, the increase in government borrowing will not cause a crowd out; a decrease in private demand and an increase in interest rates. Some may question the emergence of a shortage if rates aren’t going up but de-mand is. Hopefully, the government’s stimulus bill will prevent this shortage, keep money flowing, and interest rates low....
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This note was uploaded on 12/06/2009 for the course BCOR 1010 at Colorado.