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Now I'm confused. 0% interest rates should be inflationary, not deflationary, no? "Inflation doesn't shrink debt?" Surely it does. Equities will default or matu

• deleted 6y ago
  [deleted]
• Supermancho 6y ago
  > "Inflation doesn't shrink debt?" Surely it does. I don't see it that way, because it isn't working that way. The reduced interest rate has not resulted in additional lending, but in additional asset acquisition, mostly more debt (deflationary). This is mostly due to nobody borrowing and the uncertainty leading to people using money to pay down debts, (deflationary). Inflation can makes debt more manageable, but that's if you can get ahold of the liquidity. The liquidity doesn't exist and the printing of money via bonds, doesnt make the problem better because the dollars you get from the fed are at the price of more debt. The presence of inflation today doesn't equal reduced debt today. > Equities will default or mature The vast majority of the market overvaluation is in companies with massive leverage (investment in a type of financial debt - either bonds and mortgages) or are banks that have nothing but that to carry their share price. The modern equity prices are basically tied to the load of debt they have acquired. If you don't see things this way, that's fine. That's what it all looks like to me.