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Having over-leveraged institutions isn’t related to growth at all. I think what you’re kinda getting around to saying in your second paragraph is that inflatio

Having over-leveraged institutions isn’t related to growth at all. I think what you’re kinda getting around to saying in your second paragraph is that inflation hurts wage earners? If so, the Fed agrees with you, which is why it’s continually adjusting interest rates. In fact, that’s the entire focus of the OP article.

lotsofpulp 8y ago
Yes, but I think they’re always late and the inevitable bailouts inevitably hurt the wage earners more than the capital owners, as history has shown. Wouldn’t the “over” part of over-leveraged only be true if an error in expectations of future growth (either through increase in revenue or decrease in costs or both)? Growth is what the leverage is presumably based on. Everyday I see land and business sold for multiples more than even 2 or 3 years ago. All those loans are pricing in quite a bit of “growth”.
- AmericanChopper 8y ago
  >I think they’re always late and the inevitable bailouts inevitably hurt the wage earners It's pretty obvious that you don't actually know what you're talking about. Inflation has been pretty much under control for the past few years, and it's projected to go down slightly over the next few years. I'm really confused why you're talking about leverage or bailouts at all. Downturns in 'hot' economies tend to be caused by demand-pull inflation, which is exactly what the fed is managing, as discussed in the OP's article. Your discussion of leverage is not related to this situation at all. Leverage isn't based on growth, and doesn't require growth to service. The risk of a 'cascading default' is based primarily on the leverage ratios of large financial institutions. Those ratios were reformed from the ground up recently, and there's no indication that there's anything wrong with them. It's really quite hard to have this discussion with you, because you're talking about a few different unrelated topics, which you appear to not really understand at all.

lotsofpulp 8y ago

Yes, but I think they’re always late and the inevitable bailouts inevitably hurt the wage earners more than the capital owners, as history has shown. Wouldn’t the “over” part of over-leveraged only be true if an error in expectations of future growth (either through increase in revenue or decrease in costs or both)? Growth is what the leverage is presumably based on. Everyday I see land and business sold for multiples more than even 2 or 3 years ago. All those loans are pricing in quite a bit of “growth”.

AmericanChopper 8y ago
>I think they’re always late and the inevitable bailouts inevitably hurt the wage earners It's pretty obvious that you don't actually know what you're talking about. Inflation has been pretty much under control for the past few years, and it's projected to go down slightly over the next few years. I'm really confused why you're talking about leverage or bailouts at all. Downturns in 'hot' economies tend to be caused by demand-pull inflation, which is exactly what the fed is managing, as discussed in the OP's article. Your discussion of leverage is not related to this situation at all. Leverage isn't based on growth, and doesn't require growth to service. The risk of a 'cascading default' is based primarily on the leverage ratios of large financial institutions. Those ratios were reformed from the ground up recently, and there's no indication that there's anything wrong with them. It's really quite hard to have this discussion with you, because you're talking about a few different unrelated topics, which you appear to not really understand at all.