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Huh, you seem to know a lot more than me. Can you elaborate on the relationship between interest rate interventions and price discovery?

• imtringued 5y ago
  People can withold money from the economy and then install the equivalent of a toll booth where they charge a fee to anyone who wants the money known as interest. As long as these people to get to abuse their power they will force interest rates to be above zero, this is effectively an interest rate intervention. When these people get paid interest they will repeat the process which means there is an insufficient supply of money in the real economy to repay loans forcing people to borrow to service their interest payments. This means debts grow faster than the economy. When people eventually spend the money the value of the economy gets adjusted upwards .e.g. prices rise via inflation. Alternatively inflation stays low forever. There is an excess of savings hitting a limited number of investments that can only earn negative yields. By simply not investing people can isolate themselves from these losses which should be impossible ( cough deposit insurance). This forces interest rates into negative territory.
  • boppo1 5y ago
    > withold money from the economy How? Where do you park more than 250k to keep it outside the economy?
    • ac29 5y ago
      If the $250k is a reference to the FDIC limit, remember that is for a single account. There are products like Fidelity's Cash Management account that spread deposits to multiple sub accounts with pass through insurance and can FDIC insure much more than $250k.