Peak Oil Crisis Crash Inflation Interest Rates Mortgages

gurucat

In 1973, the Western nations' central banks decided to sharply cut interest rates to encourage growth, deciding that inflation was a secondary concern. Although this was the orthodox macroeconomic prescription at the time, the resulting stagflation surprised economists and central bankers, and the policy is now considered by some to have deepened and lengthened the adverse effects of the oil crisis.

If the oil peak happens now (2008-2009), should we expect an increase in interest rates in Europe?

I have a mortgage at variable interest rate (euribor + x%), of a large amount of money, and I have concerns about it.

Thanks! Wink

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emeraldg40 · Heavy Crude Joined: May 24, 2008 Posts: 196

yes

get a fixed rate quick

americandream

The 70's capitalist system was a transition system....from the then heavy regulation to the capital friendly variety we have today. Lack of growth then was likewise transitory.

Today's lack of growth however is more fundamental. There simply isn't enough of the wherewithal to go round, costs therefore rise and all that the Central Banks have as a mechanism to control the resulting inflation is the interest rate mechanism.

How high are they likely to go...as high as they have to, to cap (demolish non OECD) resource demand, that'show high.
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Bugger me, I hear oil's runnin out mate!

gurucat

thx americandream, so if the prices of oil grow 15% per year, we can expect the same growth of fuel (main problem), and growths in food.

the central banks will increase interest rates to 15% for example, in order to stay in line, right?

thanks!
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