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Interest rates are super low. The Fed's printing money like there's no tomorrow. It makes a lot of sense that investors would want to put their cash in the ma
by csense 6y ago
Interest rates are super low. The Fed's printing money like there's no tomorrow.
It makes a lot of sense that investors would want to put their cash in the market and/or take advantage of low interest rates to lever up.
If you're willing to bet the dollar's going to crash in the next few years due to Fed policy, it makes sense to write dollar-valued IOU's today and use them to buy stocks and gold, knowing you'll be able to pay them back with cheaper-valued future dollars.
- dragonwriter 6y ago> If you're willing to bet [...] > [...] knowing [...] These things are not the same.
- ganeshkrishnan 6y agoUS dollar will never crash. It is defacto the currency that runs the world. It's a bit like saying the lake will overflow because millions of people are pissing in it. And crash against what? Other currencies are faring far worse.
- bootcampwhere 6y agoThis is such and interesting point of view. For example, what if China, Switzerland or even the UK declared they were going to make a conceded effort to back their currency with a basket of precious metals or other commodity, hell, maybe even blockchain based with a private key on very bill. If the us doesn't or can't follow suit how long before bad money starts chasing good out if the country?
- yabai_yatsu 6y agoSo like in say 1000 years the world will still be the same? It'll crash one day. The world will change. Statistically speaking when it does it will likely be for the worse too.
- jusonchan81 6y agoIt doesn’t have to crash per se. The value can go down. As in inflation. This is already happening in some sense. It’s just accelerated when the real value you get back is lesser for dollar by the day. A few years back can you imagine buying a $1000 phone? The measured inflation is really convoluted. I doubt it measures the true value of a dollar. The good thing is other currencies will just get devalued equally considering dollar is the world currency for the most part.
- overtonwhy 6y agoPeople routinely spent over $1,000 on computers, cameras, video cameras, etc and a phone does all of those things well. You can read about how inflation is calculated, it makes sense: https://www.bls.gov/cpi/questions-and-answers.htm https://www.bls.gov/cpi/questions-and-answers.htm
- berdario 6y agoYou're currently right, but the world is changing https://www.bloomberg.com/news/articles/2020-08-12/russia-ditches-the-dollar-for-bulk-of-its-exports-to-china https://www.bloomberg.com/news/articles/2020-08-12/russia-di...
- christophilus 6y agoSounds like recency bias. Every historically dominant fiat currency has eventually lost its dominance.
- pranay01 6y agoThere was a post by an economist that low rates is a tool in the hand of politicians and once the get a taste of it, they never let it go. At least I see this happening in India. Central bank is influenced by govts to keep rates low. Don't know well about how US Feds and govt are incentivised