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> It has its bases in reality, though. Remember Yo? 1.5M at 10M$ valuation for an app that broadcasts "yo". This is only made possible because borrowing money i
by chimeracoder 8y ago
> It has its bases in reality, though. Remember Yo? 1.5M at 10M$ valuation for an app that broadcasts "yo". This is only made possible because borrowing money is extremely cheap in the US compared to Europe.
This is itself reductive and doesn't really represent the full story (venture capital in particular is itself already largely sourced from foreign money).
In any case, the statement "low interest rates encourage investment" isn't fridge (in fact, it is literally tautological). The fringe part is the idea that the US is fueling cycles this way, and the implication that the US economy would somehow be better off by paying off debt instead of printing money.
- mschuster91 8y ago> The fringe part is the idea that the US is fueling cycles this way I thought that the entire point of lowering interest rates is to fuel the economy? Problem is when the markets have become addicted to cheap money, and politicians don't have the guts to force them to give up the cheap money, so eventually the bubble bursts...
- stretchwithme 8y agoIt exaggerates the cycles for sure. If the Fed let interest rates be set by the market after the next bubble collapse, the recovery would be slower, less bubbly and growth would be based on the value of things, rather than how easily a sector is stoked by interest rates. And it would be more likely to be sustainable and stable.