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I think wages only can go up with abundant energy. This time around interest is lagging inflation by atleast 1 year. In the 70s the rate and salaries increase

by bullen 4y ago

I think wages only can go up with abundant energy. This time around interest is lagging inflation by atleast 1 year. In the 70s the rate and salaries increased BEFORE the inflation occured = inflation was rate/salary driven and because debt level was lower. Today salaries are not increasing 10% per year for most people. So I actually think the interest rate hike increases the scarcity inflation eventually since energy production need low interest loans to build new sources. The only sure thing about the hike is that ZERO new companies will be created, for good and for bad.

dillondoyle 4y ago
How is it possibly true that ZERO companies will be created if interest rates go up. How many businesses are equity funded in the first place? We did not have capital to start our business. Most small businesses starting from zero can't get capital in the first place (excluding personal funds, family funds which aren't usually charging interest tied to the Fed benchmark) Those tech companies that do get tons of capital despite negative value are somewhat unique and for sure interest rates will eventually affect that. Valuations are already starting to come back to at least the Stratosphere ;)
- bullen 4y ago
  It's deflationary (atleast on what you can borrow for), so usually people wait. Just like you would not buy a house now, you wouldn't start a business. I'm talking statistically, not like a rule. ZERO relative to lower rates.
imtringued 4y ago
>So I actually think the interest rate hike increases the inflation since energy production need low interest loans to build new sources. You mean wind, solar and nuclear power? I mean they are capital intensive because the operational costs are dwarfed by the initial investment. With coal and gas, the fuel is an ongoing and high expense compared to the power plant itself.
- bullen 4y ago
  Yes, all energy requires more energy since EROEI (energy return on energy invested) on dead trees went below 10-to-1 in the past decades (initially around 100-to-1 when coal, oil and gas where initially discovered). Wind and solar are only interesting in very small solutions (think small sailing boats), nuclear is super energy intense to build! Hydro is the ONLY balanced investment but all good locations are already in use.

by bullen 4y ago

dillondoyle 4y ago

How is it possibly true that ZERO companies will be created if interest rates go up. How many businesses are equity funded in the first place? We did not have capital to start our business. Most small businesses starting from zero can't get capital in the first place (excluding personal funds, family funds which aren't usually charging interest tied to the Fed benchmark) Those tech companies that do get tons of capital despite negative value are somewhat unique and for sure interest rates will eventually affect that. Valuations are already starting to come back to at least the Stratosphere ;)

bullen 4y ago
It's deflationary (atleast on what you can borrow for), so usually people wait. Just like you would not buy a house now, you wouldn't start a business. I'm talking statistically, not like a rule. ZERO relative to lower rates.

imtringued 4y ago

>So I actually think the interest rate hike increases the inflation since energy production need low interest loans to build new sources. You mean wind, solar and nuclear power? I mean they are capital intensive because the operational costs are dwarfed by the initial investment. With coal and gas, the fuel is an ongoing and high expense compared to the power plant itself.

bullen 4y ago
Yes, all energy requires more energy since EROEI (energy return on energy invested) on dead trees went below 10-to-1 in the past decades (initially around 100-to-1 when coal, oil and gas where initially discovered). Wind and solar are only interesting in very small solutions (think small sailing boats), nuclear is super energy intense to build! Hydro is the ONLY balanced investment but all good locations are already in use.