Since the Great Recession in 2008, interest rates have remained low.

Most people looking to buy a house or car, or refinance a mortgage love the idea of low interest rates.But from an economic standpoint, it might not be such a good idea if done in perpetuity.Dr. Edmond Seifried, co-chairman of Seifried & Brew and professor emeritus of Economics and Business at Lafayette University, explained why this would be the case Tuesday morning at the eighth annual Economic Outlook Breakfast at the Mahoning Valley Country Club in Lehighton.The event was organized by the Carbon Chamber and Economic Development and presented by Mauch Chunk Trust, Tamaqua Area Chamber of Commerce, Times News and PPL Corp.Seifried focused on the federal funds rate, which is an interest rate set by the Federal Open Market Committee for lending between financial institutions."To go from unemployment to prosperity, the inflation rate has to drop by 5 percent to get the economy stimulated," Seifried said.In the United States, the interest rate is currently 1.698 percent. In many countries in the world, the interest rates have dropped into the negative.For example, Germany's interest rate is -0.1 percent, Japan is at a -0.02 percent. Seifried said that the news in Denmark reported that a couple with a mortgage actually received a check from the bank, because the interest rate is in the negative."How long would you stay in business it you were paying out," he said. "45 percent of the world sovereign debt has a negative interest rate."Although the recession ended in July 2009 for the United States and most of the world, the interest rates for federal funds have remained between 1.4 percent and 2.4 percent for the last six years, Seifried said.Since 2008, the U.S. inflation rate has fluctuated between .1 percent and 3 percent."You have to charge at least the inflation rate on the loan to make back your money," he said.Seifried said the Permazero theory on monetary policy says that low interest rates are not a temporary situation, but will continue on as the normal policy.Some countries are creating extremely long bond terms, because this to be the case. Ireland and Belgium have created a bond that will not mature for 100 years, he said."They think inflation has vanished," he said.The thought is that inflation is reduced because of technology.Every time inflation begins to rise, a new technology comes around and reduces costs, Seifried said.Another reason why inflation could remain low is because China and countries in Africa and South America have untapped employment populations. The unemployment rate in South America is 24 percent, he said.Seifried went on to say that the Reifschneider Paradox basically says, "If Permazero is correct, we're doomed."Why?As they interest rates drop, governments have to spend more money to buy bonds, Seifried said. This in turn runs a country deeper into debt.If a recession occurs, the interest rates can't drop any further in order to stimulate the economy.If the Federal Reserve doesn't begin to raise interest rates, then there has been talk of allowing the federal government to buy stocks in companies, he said.It would take a change to the laws to allow for this to happen. Right now, the federal government can only buy stocks in Freddie Mac and Fannie Mae.