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Cheap Money |
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Cheap Money A monetary policy in which a central bank sets low interest rates so that credit is easily attainable. This makes borrowing easy for business, which stimulates investment and expansion of operations. The immediate result of cheap money is a boost in stock prices; in the medium term, cheap money promotes economic growth. However, if cheap money remains in the economy for too long, it can lead to a situation in which there is a glut of currency or too many dollars chasing too few goods and services leading to inflation. For this reason, most central banks alternate between policies of cheap money and tight money in varying degrees to encourage growth while keeping inflation under control. How to thank TFD for its existence? Tell a friend about us, add a link to this page, add the site to iGoogle, or visit webmaster's page for free fun content. |
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The punch, of course, is cheap money that businesses have been feasting on to chase higher returns in emerging markets such as China and India. It's kind of a skill to find coot clothes for cheap money," says Bettridge. Cheap money for customers is like heroin; once they're hooked, it takes a long, painful withdrawal before they're over it. |
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