This is the Cato Daily Podcast for Friday, May 20th, 2011. I'm Caleb Brown.

Corporations, even those sitting on piles of cash, are loading up on debt, sensing the Federal

Reserves unprecedented interventions are on the wane. Clearly interest rates are

a powerful force. Jerry O'Driscoll, Senior Fellow at the Cato Institute, comments.

Google is among corporations that are sitting on billions of dollars in cash, but they have nonetheless decided, hey, let's borrow a bunch of money.

Interest rates are super low, and we're sensing that the Federal Reserve is going to end this particular unprecedented intervention.

And we, Google, and a bunch of other corporations to say, hey, let's get some debt while we can.

Yeah, it's a good question. you're right in ordinary times why would somebody borrow if they

had cash not just millions and hundreds of millions but tens of

billion dollars worth of cash and they wouldn't but the Fed is essentially made

money free or nearly so and now with the prospect that money will actually become

somewhat more expensive, people are loading up on

debt, but people have been loading up on debt throughout this cycle in the US but also

in the rest of the world.

And the interest rate for a lot of economists, it's the thing.

It's what makes you decide between now and later for all kinds of creation, all kinds of

consumption, all sorts of economic activity.

Yes, and when interest rates are artificially low, by which I mean they can't be sustained

at that low level, then people borrow at these interest rates whether it's Google or somebody

borrowing to finance their day trading activities and then when interest

rates go up whether it's corporations or individuals again, they

discover that this changes the economics of what they've committed to and as a

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