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Out of control interest rates in ars regendi

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nachoz01
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Post: #1
Out of control interest rates in ars regendi

Even after Money Reform 1, Bank Reform, and several major cuts in interest rates, the interest rates in the game are completely out of control at times. You go from 1 percent interest to 8 percent in just 4 quarters.

01.11.2012 19:17
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Snorunt30
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Post: #2
RE: Out of control interest rates in ars regendi

nachoz01 Wrote:
Even after Money Reform 1, Bank Reform, and several major cuts in interest rates, the interest rates in the game are completely out of control at times. You go from 1 percent interest to 8 percent in just 4 quarters.


Just by a quick look at your country, its your absolutely unsustainable debt level increase (New indebtedness [?] -18,459.35 Bil. €), and you have an astronomically high debt (in my experience anyway, might be small compared to others), unless I'm mistaken interest rates rise depending on your debt levels or new indebtedness (I believe the latter), and by the looks that was likely caused by your health spending and the monument being built (though I could be incorrect). So basically I think your rates are rising rapidly because of your really high debt in tandem with high new indebtedness Pfeif (as in, not a bug)


Ense petit placidam sub libertate quietem.
(By the sword we seek peace, but peace only under Liberty.)
If the opposite of pro is con, what is the opposite of progress?
Congress.
01.11.2012 20:07
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nachoz01
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Post: #3
RE: Out of control interest rates in ars regendi

Snorunt30 Wrote:
Just by a quick look at your country, its your absolutely unsustainable debt level increase (New indebtedness [?] -18,459.35 Bil. €), and you have an astronomically high debt (in my experience anyway, might be small compared to others), unless I'm mistaken interest rates rise depending on your debt levels or new indebtedness (I believe the latter), and by the looks that was likely caused by your health spending and the monument being built (though I could be incorrect). So basically I think your rates are rising rapidly because of your really high debt in tandem with high new indebtedness Pfeif (as in, not a bug)


Thanks for your reply. I appreciate it. The problem is if you took all control from banks for setting interest rates and monetary policies and took a large steak in the banks themselves that belong to the states then you should have all control over interest rates (just like the federal reserve in real life). I dont understand why interest rates fluctuate like crazy even after taking control of the banking system and all monetary power. The US has astronomical debt in real life but the interest rate still stays at 1-2 percent because of the fed. Passing Money Reform I and Bank Reform should give you full control of interest rates

03.11.2012 05:55
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Sheep
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Post: #4
RE: Out of control interest rates in ars regendi

The nominal interest is a combination of prime rate and market interest rate. If public new indebtness is higher than GDP, it's really tough to find people to lend you all that money. They will demand very high interest rate for it. And since their money is mostly used for public expenditures, they have trouble to give loans elsewhere. Hence market interest rate explodes, also increasing nominal interest.

Providing the banks with cheap money (low prime rate) will reduce the explosion, but is not powerful enough to stop it.


03.11.2012 15:17
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Snorunt30
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Post: #5
RE: Out of control interest rates in ars regendi

nachoz01 Wrote:

Snorunt30 Wrote:
Just by a quick look at your country, its your absolutely unsustainable debt level increase (New indebtedness [?] -18,459.35 Bil. €), and you have an astronomically high debt (in my experience anyway, might be small compared to others), unless I'm mistaken interest rates rise depending on your debt levels or new indebtedness (I believe the latter), and by the looks that was likely caused by your health spending and the monument being built (though I could be incorrect). So basically I think your rates are rising rapidly because of your really high debt in tandem with high new indebtedness Pfeif (as in, not a bug)


Thanks for your reply. I appreciate it. The problem is if you took all control from banks for setting interest rates and monetary policies and took a large steak in the banks themselves that belong to the states then you should have all control over interest rates (just like the federal reserve in real life). I dont understand why interest rates fluctuate like crazy even after taking control of the banking system and all monetary power. The US has astronomical debt in real life but the interest rate still stays at 1-2 percent because of the fed. Passing Money Reform I and Bank Reform should give you full control of interest rates


The US debt is high IRL, but it does not spend nearly 100% of its GDP on new indebtedness, actually just over 10% more spending than income (according to the debt clock), and you are spending nearly 100% in a quarter (or however budgets are figured in, not in standard units (each is a month, quarter... etc) Kopfkratz)


Ense petit placidam sub libertate quietem.
(By the sword we seek peace, but peace only under Liberty.)
If the opposite of pro is con, what is the opposite of progress?
Congress.
04.11.2012 04:10
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Titian
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Post: #6
RE: Out of control interest rates in ars regendi

actually i think as well that there is a bug;
the interest rate model is imo ok, but at the moment money simply vanishes; in a closed economy all expenditure needs to equal income and if the economy happens to be opened for trade but is not able to fully satisfy domestic demand with domestic production then the difference needs to be covered through imports.


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04.11.2012 04:28
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