One may think of 'interest rates" as merely a concern of cutting edge modern economic news. Indeed, the rate of interest has been the obsession of the business media of recent weeks. One March 21, 2005 Business Week article proclaimed, "Pop! Goes the Auto Bubble-with oil prices and interest rates rising! (Mandel, 2005) But in actual fact interest rates are simply the percent at which an individual is charged for borrowing money, either from a bank, a human being, or another entity such as a credit card company. Interest rates are an old institution-once, the rate of interest was called 'usury" and banned by the church. Now charging a reasonable rate of interest for borrowing money is considered a necessary fact of modern life, particularly for large, durable goods such as cars, houses, and appliances.

             Unsurprisingly, the lesser the rate of interest, that is, the less one is 'charged" for borrowing money, the more attractive it is to borrow money and to spend money, money that one does not technically have in one"s pocket. The higher the rate of interest, the less likely one is to borrow and spend money. Thus, when the Federal Reserve wishes to stimulate the economy it lowers the rate of interest. This makes it more attractive for people to borrow money, and less attractive to save money in savings accounts and long-term certificates of deposits. When the Federal Reserve wishes to curtail an economy that is in danger of over-expanding and heading into inflation, it increases interest rates, making saving a more valuable prospect.

             The auto industry, as do most industries that manufacture large, durable goods that consumers cannot usually buy out of pocket, prefers lower interest rates, as consumers are more apt to obtain car loans and to spend their money on new cars when interest rates are lower. The existence of more readily available credit has long been a boon to the auto industry, as people no longer have to buy a car with ready cash as they did at the turn of the 20th century.