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Low interest rates are great for the rich. Wealthy people in general know how to effectively utilize capital to make more money and if that capital is cheaper
by 300bps 11y ago
Low interest rates are great for the rich. Wealthy people in general know how to effectively utilize capital to make more money and if that capital is cheaper then all the better for them. I mean cost of capital is one of the chief components of calculating the net present value of a prospective project so the lower the interest rate the more profitable various projects are.
- rhino369 11y agoAnd other rich people are the one's loaning their money out for practically nothing. It's good for active investors (which is why it's done), but it's bad for less risky investments (bonds and other loans). And those investments carry greater risk, which is a big downside. If, for example, the unicorn bubble is real, all that cheap capital was a curse, not a benefit. For the last 8 years, it's been impossible to save money without big risk. Interest rates have been below inflation.
- jandrese 11y agoAlthough to be fair, high interest rates are also great for the rich. It's good to be rich.