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Not OP, but let me present my opinion. Interest rates have been on a downward trend for the past few decades. This is a new thing, that has not happened before

Not OP, but let me present my opinion. Interest rates have been on a downward trend for the past few decades. This is a new thing, that has not happened before. The Fed seem hell bent on making sure that there are no deflationary recessions anymore, and i think that is the true cause of the long term decline in interest rates. One of the results of this trend is the hyper growth in asset prices. Reduced interest rates dictate a reduced time value of money, and higher valuations. This rewards the owner class with increased wealth, and doesn't do anything (and well actually harms) the rentee class, which pays the same rent for a home. The problem is that this is not sustainable. I'm not sure if you agree, but we cannot keep decreasing interest rates forever. It would have to slow down and stop one day. What that means is that some future (or present) generation would not be rewarded with increased wealth that past generations have enjoyed. Essentially in order to fight deflation, the Fed has borrowed immensely from the future to openly gift wealth to the present, making the future less rosy.

SantalBlush 5y ago
I agree with most of what you say here, but in spite of the shortcomings of the Fed, I'm not convinced that its entire existence is problematic. I just think it shouldn't have lowered interest rates so aggressively for so long.
- cinquemb 5y ago
  Either way, whether one think their existence is problematic or not, to me, it does seem like the federal reserve system and CB's in general, are in the process of "jumping the shark" wrt to CBDC's… they are already behind. Like you acknowledged in another comment, most money created now is through private banks lending and exchanging future cash flows with one another (some subset of which are also the private share holders of the different FRB's in the US), and arguably this is the system being threatened now with new crypto entrants (uncollateralized lending in defi is just getting started, stable coin fixed income is just getting started, uncollateralized and decentralized stablecoins are also on the horizon, etc) and increasingly looking to attract fixed income cashflows from tradfi (i.e TBTF banks who have been publicly outspoken against crypto for years, being forced by some of their HNW/institutional clients to get exposure), who are solving the lack of trust and market structure issues between counterparties without the regulatory overhead (which in practice is used to serve the primary dealer banks interests, so self-serving just like any other random defi protocol at its worse).

SantalBlush 5y ago

I agree with most of what you say here, but in spite of the shortcomings of the Fed, I'm not convinced that its entire existence is problematic. I just think it shouldn't have lowered interest rates so aggressively for so long.

cinquemb 5y ago
Either way, whether one think their existence is problematic or not, to me, it does seem like the federal reserve system and CB's in general, are in the process of "jumping the shark" wrt to CBDC's… they are already behind. Like you acknowledged in another comment, most money created now is through private banks lending and exchanging future cash flows with one another (some subset of which are also the private share holders of the different FRB's in the US), and arguably this is the system being threatened now with new crypto entrants (uncollateralized lending in defi is just getting started, stable coin fixed income is just getting started, uncollateralized and decentralized stablecoins are also on the horizon, etc) and increasingly looking to attract fixed income cashflows from tradfi (i.e TBTF banks who have been publicly outspoken against crypto for years, being forced by some of their HNW/institutional clients to get exposure), who are solving the lack of trust and market structure issues between counterparties without the regulatory overhead (which in practice is used to serve the primary dealer banks interests, so self-serving just like any other random defi protocol at its worse).