4 ms·
one component you overlooked is the cheap cost of money, in the form of low interest rates, juicing the economy for the past decade+.
by muaytimbo 4y ago
one component you overlooked is the cheap cost of money, in the form of low interest rates, juicing the economy for the past decade+.
- phkahler 4y ago>> one component you overlooked is the cheap cost of money, in the form of low interest rates, juicing the economy for the past decade+. I've been wondering if "low interest rates" juice the economy, or if "lowering interest rates" does. The presumption seems to be the former, but I suspect a drop in rates will eventually lead to a new equilibrium. In other words, there isn't much long term correlation between interest rates (at a particular level) and growth.
- muaytimbo 4y agoI think cheap money expands the economy unsustainably. When you can't make any interest by saving people look for higher ROI via investing. I think in those climates VC money comes cheap, finances unsustainable business models, those businesses employ people which now compete against established businesses for talent and wages rise. With higher wages comes competition for a limited supply of goods and voila, the cycle of inflation. At least that how I understand it, but I'm no economist.