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Thursday, January 22, 2009

Promote Growth My Ass!

Malaysia is an export oriented country. When the buyers have no money to buy, you cannot sell. So, how does a low interest environment promote growth? Yes, you can borrow cheaply, but who is going to buy your products? Yes, you can buy a house with cheap interest, but if you fear of losing your job, will you take in new loans?

By lowering the interst rate, the Malaysian ringgit will get whack. This will definitely makes our exports cheaper but our neighbor can also lower their interest rate and so we go into a competition of let's see who reaches zero first!

To promote growth through cheap money? There are other ways lar. Improve in efficiency is one of them. You make your product cheaper to allow people to buy it more for the same amount. Improve in technology is another. You make your product better so that people will buy your product instead of from others.

My dad is very angry with this lowering of interest rate. Pensioners will definitely suffer. This is the problem will modern economy. Economist don't give a damn thought about poor people. What we are doing is tentatively is to support poorly run company that cannot survive in this environment by providing cheap credits to them. What Jim Rogers are all well know by every common people in Malaysia. The politicians are useless! We have so much resources but we are not using it efficiently. The money that we got are simply thrown to those with special contacts.

We do not need to promote growth by lowering interest rate, we can promote growth by kicking out those useless and incapable politicions from office. Yes, change we can!

2 comments:

Smartbiz said...

Swifz, you have different but pragmatic views. Interest Rate manupulation has its bright and dark sides. But, it seems economists around the world only know how to raise or cut interest rate when facing problems.

invest_klse said...

hahaha.....I totally agree with your last paragraph.....