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I disagree, I think that the federal reserve's artificially low interest rates and essentially unlimited supply of money for the banks to loan out at these inte
by wuliwong 9y ago
I disagree, I think that the federal reserve's artificially low interest rates and essentially unlimited supply of money for the banks to loan out at these interest rates were at the heart of the most recent financial crisis in the US. A decentralized currency would certainly mitigate that.
- soVeryTired 9y agoWhat exactly do you mean by 'artificially low'? All short term rates are just a function of central bank policy. The bank will raise or lower rates in an attempt to control inflation (and any other mandate). 'Abnormal' I'd grant you, but not artificial.
- joyeuse6701 9y agoartificial as in not 'natural' and natural as in set by market forces, which a central bank setting a short term rate is not a 'natural' market force.
- soVeryTired 9y agoIt's been a long time since short rates were set by market forces. And the financial system wasn't particularly stable then either.
- un_montagnard 9y agoNo. The heart of the crisis is people believing they can easily make money by investing in a product they don't understand. I can sell a CDO on CDS in Bitcoin, and make a lot of money while the buyers are all getting screwed. And they will be even more screwed as nobody will print cash to cover or limit their losses.
- stale2002 9y agoThe people who invested in CDOs SHOULD get screwed. The rest of us who weren't stupid enough to do that shouldn't be forced to cover their losses. That's the point.
- wuliwong 9y agoWhat you are describing is a moral hazard. A situation where people will take risks they wouldn't normally take because they know they will be bailed out if they lose money.