Is it a legal fraud? If so, who is to be prosecuted against such frauds?
2006-08-07 19:00:50 · 5 answers · asked by bainsal 2 in Social Science ➔ Economics
Rate of intrest is probably the only item which is intended to be controlled by central authority in price mechanism.
2006-08-07 21:19:21 · update #1
what???
2006-08-07 19:04:29 · answer #1 · answered by David R 1 · 0⤊ 0⤋
In this case, rate of interest is too low. The Central Bank will increase the interest rate.
The higher interest will likely to curb the high inflation rate.
The lender is at a loss. However, if this continues, the whole economy will go chaos and thus, everyone will be at a loss.
There is nothing legal or illegal here. It may be a description of a situation the economy may fall into.
2006-08-08 09:00:31 · answer #2 · answered by Anonymous · 0⤊ 0⤋
The situation you are describing is called negative real interest rate. In a situation like this, banks are unwilling to lend and only do so because the government is twisting their arms. This situation is a loss for almost everyone, except the government and its clients, who get to finance their borrowings at a negative real interest rate.
Legally speaking, it is not a fraud, it's a government policy...
2006-08-08 12:38:16 · answer #3 · answered by NC 7 · 0⤊ 0⤋
Fraud is such a good thing, I never knew.
2006-08-09 02:18:58 · answer #4 · answered by orsel 2 · 0⤊ 0⤋
the lender is at loss;
it's not legal fraud; inflation is virtually uncontrollable.
the lender should increase interest.
2006-08-08 02:06:52 · answer #5 · answered by Neo_Apocalypse 3 · 0⤊ 0⤋