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> 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
by 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 agoIt'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.