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Wow, that's a roundabout justification. You don't need low interest rates for people to make stupid investments. Uber could just as easily be an example of wha
by ethanbond 10y ago
Wow, that's a roundabout justification. You don't need low interest rates for people to make stupid investments.
Uber could just as easily be an example of what happens when the weather is nice and we grow a surplus of food and food prices fall and therefore people spend their remaining capital on bad investments like Uber.
- rhizome 10y agoNo, you don't need low interest rates for stupid investments, but it makes them a lot cheaper.
- hx87 10y agoIt also makes non-stupid investments cheaper, so all else being equal cheap money shouldn't increase the proportion of stupid investments.
- hughw 10y agoBut it makes ordinary safe investments like bonds return unappetizing, even negative rates. So you can't put your billions in bonds. You look for high yield on something like Uber.
- kmonsen 10y agoNot entirely true, with low rates bonds and banks are loosing to inflation so you "need" to invest in something.
- rhizome 10y agoso all else being equal cheap money shouldn't increase the proportion of stupid investments All else isn't equal because it's not a free market. You can't just say "Oh, Uber looks good, I think I'll invest in them." It's not even rivalrous, it's simply private. So, cheap investor money has to find an outlet some other way.