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You might be right, and I was clear that it was only a model. This gives a starting point. You can then measure the value added by the externalities you mentio
by mellavora 4y ago
You might be right, and I was clear that it was only a model.
This gives a starting point. You can then measure the value added by the externalities you mention.
Or, as the author of the source article did, you can also measure the value added by low interest rates and low tax rates, then make some guesses as to what happens when those reverse.
- FredPret 4y agoFair enough. I think interest rates cannot add value; the stability that makes low rates possible is the thing that adds value. I’m no economist though
- mellavora 4y agoI saw a long-term study of interest rates, going back hundreds of years (like to the 1300s or so). The long-term trend is for a decline, and probably due to the increasing stability reducing risk, thus the loans get a lower premium. Interest rates don't add value; they are the cost of money. Money should be expensive enough that it is encouraged to only use it on investments which are likely to add value. When money becomes too cheap, it is "worth it" to invest in things with very little real chance of payout. What that level is, I certainly don't know.