Advertisement
YOU ARE HERE: LAT HomeCollectionsBanks

Shilling's Remark on Real Interest Rates Challenged

July 14, 1985

In "Downturn Is Too Late to Prolong Expansion" (Viewpoints, June 23), A. Gary Shilling, makes the statement, "Even after the big decline this spring, interest rates in real, or inflation-adjusted, terms are still more than twice their normal level."

The Times recent Key Rates table shows banks paying less than 6.5% on money-market accounts and less than 8.5% on two-year certificates of deposit accounts. A saver in a 25% income tax bracket, with inflation at 4%, will realize less than 1% on his MMA or 24% on his CD.

Maybe Shilling is thinking of what the banks are charging for money, not paying for it. Maybe inflation at 4% still isn't normal.

EMEL SMITH

Beverly Hills

Advertisement
Los Angeles Times Articles
|
|
|