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I think it's related to the interest rate. If the interest rate is 0% then it means that money is worthless (because in that case debt behaves exactly the same

I think it's related to the interest rate. If the interest rate is 0% then it means that money is worthless (because in that case debt behaves exactly the same as actual money)... If money is worthless then assets which produce money (profit) are also worthless... So what is actually valuable in a world where money is worthless? Human attention (brand awareness)! Because brand awareness is probably the only asset that won't be affected by a rise in interest rates. So brand awareness is the key to getting a good share of tomorrow-money (which, unlike today-money, might actually have value). So that's why advertising is so valuable now.

JumpCrisscross 8y ago
> If the interest rate is 0% then it means that money is worthless (because in that case debt behaves exactly the same as actual money) Zero or even negative interest rates don't mean money is worthless. Money money, as in cash, always yields zero. And even in a zero or negative rate environment, there are still assets (including debt) which have a positive yield. The point of lowering interest rates is to drive capital to those riskier ventures.
- chii 8y ago
  > zero or negative rate i don't understand how this is even possible.
  - JumpCrisscross 8y ago
    > i don't understand how this is even possible $1 loaned for one year at 10% means, after 1 year, you get $1 back plus 10¢ of interest. $1 loaned for one year at -10% means, after 1 year, you get back $90. This is reality in multiple economies [1]. Traditionally, monetary policy hit a zero bound with rates. Why would one deposit money at -10% when one can hold cash at 0%? But modern finance sometimes means it's better to hold bonds yielding -1% than it is to withdraw physical cash. (For example, to use as collateral.) The ultimate goal of these policies is to make holding cash so uncomfortable that investors have to deploy the capital. [1] https://www.bbc.com/news/business-32284393 https://www.bbc.com/news/business-32284393
    - alphacatcher 8y ago
      "$1 loaned for one year at -10% means, after 1 year, you get back 90 cents."
soVeryTired 8y ago
> If the interest rate is 0% then it means that money is worthless Essentially all debt has a maturity (there are rare exceptions). What you're saying is only true if interest rates are 0%, and will be forever more. If someone borrows a lot of money at 0%, they face the risk that eventually they're going to have to refinance at a higher rate.
- grosjona 8y ago
  It's often possible for people to shift the risk towards other entities. In the absence of criminal misconduct, if a corporation goes bankrupt, it wont affect the shareholders or executives. They can still walk away with huge paychecks and bonuses from preceding years. It's pretty simple; create a corporation with yourself as CEO, make that corporation take a huge loan using overvalued corporate assets (paid for by someone else) as collateral, then as the CEO, give yourself huge paychecks and bonuses and then run the corporation into the ground over the course of a few years. The lower the interest rate, the more time you have to enrich yourself before the company goes belly up.
exHFGuy 8y ago
Your chain of logic isn't correct. Money isn't worthless today because rates are 0%. Ask yourself if you really believe that???? After you ponder that a bit, and if you still believe it, send us your money.
- grosjona 8y ago
  Unfortunately for you, I don't have any money to give. When I get my paycheck, I do my best to get rid of it as fast as I can.

JumpCrisscross 8y ago

> If the interest rate is 0% then it means that money is worthless (because in that case debt behaves exactly the same as actual money) Zero or even negative interest rates don't mean money is worthless. Money money, as in cash, always yields zero. And even in a zero or negative rate environment, there are still assets (including debt) which have a positive yield. The point of lowering interest rates is to drive capital to those riskier ventures.

chii 8y ago
> zero or negative rate i don't understand how this is even possible.
- JumpCrisscross 8y ago
  > i don't understand how this is even possible $1 loaned for one year at 10% means, after 1 year, you get $1 back plus 10¢ of interest. $1 loaned for one year at -10% means, after 1 year, you get back $90. This is reality in multiple economies [1]. Traditionally, monetary policy hit a zero bound with rates. Why would one deposit money at -10% when one can hold cash at 0%? But modern finance sometimes means it's better to hold bonds yielding -1% than it is to withdraw physical cash. (For example, to use as collateral.) The ultimate goal of these policies is to make holding cash so uncomfortable that investors have to deploy the capital. [1] https://www.bbc.com/news/business-32284393 https://www.bbc.com/news/business-32284393
  - alphacatcher 8y ago
    "$1 loaned for one year at -10% means, after 1 year, you get back 90 cents."

soVeryTired 8y ago

> If the interest rate is 0% then it means that money is worthless Essentially all debt has a maturity (there are rare exceptions). What you're saying is only true if interest rates are 0%, and will be forever more. If someone borrows a lot of money at 0%, they face the risk that eventually they're going to have to refinance at a higher rate.

grosjona 8y ago
It's often possible for people to shift the risk towards other entities. In the absence of criminal misconduct, if a corporation goes bankrupt, it wont affect the shareholders or executives. They can still walk away with huge paychecks and bonuses from preceding years. It's pretty simple; create a corporation with yourself as CEO, make that corporation take a huge loan using overvalued corporate assets (paid for by someone else) as collateral, then as the CEO, give yourself huge paychecks and bonuses and then run the corporation into the ground over the course of a few years. The lower the interest rate, the more time you have to enrich yourself before the company goes belly up.

exHFGuy 8y ago

Your chain of logic isn't correct. Money isn't worthless today because rates are 0%. Ask yourself if you really believe that???? After you ponder that a bit, and if you still believe it, send us your money.

grosjona 8y ago
Unfortunately for you, I don't have any money to give. When I get my paycheck, I do my best to get rid of it as fast as I can.