Interest rates correlated with crime rates?

With a recession hitting the US in  late 2007 and a continued economic malaise foreseen for sometime, coupled with about 25 million people without jobs (when you factor in the participation rate), you would think crimes and specifically violent crimes would be on the increase.

Surprise: Nationally, the number of violent crime in the US fell by 5.5% in 2010 and by almost the same amount in 2009.

American economist Todd G. Buchholz is a former senior economic advisor at the White House and he essentially argues that if “tomorrow is worth waiting for” then people are less likely to commit serious crimes. Economically, tomorrow is worth waiting for when interest rates are low as invested capital has a higher expected value with low interest rates. Conversely, if interest rates were high it makes it less attractive to invest. You pay more interest to finance a business and if inflation is also high, it eats at purchasing power also.

An interesting though, but if it is proven to be true would a committee of police chiefs and sheriffs get a say on monetary policy?

For more info: Here and Here.

Preet Banerjee
Preet Banerjee an independent consultant to the financial services industry and a personal finance commentator. You can learn more about Preet at his personal website and you can click here to follow him on Twitter.
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