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Low Interest Rates --> capitalism applied to every possible market while in search of returns?

by dpflan 4y ago

CalRobert 4y ago
Low interest rates combined with strict regulatory regimes that prevent capitalists from building more housing in response to price signals while also making it unappealing to rent to permanent tenants?
dougSF70 4y ago
Turns people in to rent seekers,
- deleted 4y ago
  [deleted]
Spooky23 4y ago
That and too much cheap capital. It was trivial to get money, which encourages businesses that shouldn’t exist.
AtlasBarfed 4y ago
I almost wonder if a "proper" capitalism should never see ultra low interest rates for greater than 1-2 years. It destroys consumer saving and savings habits, it encourages rapacious leverage acquisition behavior (which we're seeing in the fucking consumer housing market how nuts is that). The fed should have some wheel that could introduce random 4% swings every six months that would hopefully disrupt the private equity leveraged buyout schemes, but who am I kidding, it would just lead to some ridiculous speculation/betting on what the next random modifier to the base interest rate is. Perhaps, rather than offering good interest rates to large companies and hedge funds / private equity, there should be special low interest rates for single house owners, but businesses actually have to pay higher interest rates for commercial ventures. Of course someone would figure out a scheme to get individuals to overprovision their mortgages and then back-assemble the excess debt with kickbacks to route it to other uses. There has to be some way to have low interest rates to help out the "little guys" but make big biz and stock market leverage/margin buying pay a higher interest rate. If you have a high interest rate, it just benefits banks and the rich, who are the only people that have "real money", in case anyone actually does have "real money".
- dougSF70 4y ago
  I kinda agree, low interest rates get countries into trouble that only a panademic can reset.
- friendzis 4y ago
  > Of course someone would figure out a scheme to get individuals to overprovision their mortgages and then back-assemble the excess debt with kickbacks to route it to other uses. Legally mandated LtV < 1 based on `min(sale, appraisal)` would pretty much hinder such schemes. You can always sell your house to your child/parent and get equity back into the family anyway, but in general this would mean mortgage (real estate leveraged financing) could only be used to finance the sale.
sfe22 4y ago
Government imposed low interest rates are the opposite of free market capitalism.
- throwaway049 4y ago
  Commercial lenders are free to lend at higher rates. What do you mean by 'government imposed'?
  - sfe22 4y ago
    The fed sets interest rates, not the free market.
flashfaffe2 4y ago
Low Interest-->Crony capitalism in a real free market loss would have occurred by the accountable people.

Low Interest Rates --> capitalism applied to every possible market while in search of returns?

by dpflan 4y ago

Low Interest Rates --> capitalism applied to every possible market while in search of returns?

Low interest rates combined with strict regulatory regimes that prevent capitalists from building more housing in response to price signals while also making it unappealing to rent to permanent tenants?

dougSF70 4y ago

Turns people in to rent seekers,

deleted 4y ago
[deleted]

Spooky23 4y ago

That and too much cheap capital. It was trivial to get money, which encourages businesses that shouldn’t exist.

AtlasBarfed 4y ago

I almost wonder if a "proper" capitalism should never see ultra low interest rates for greater than 1-2 years. It destroys consumer saving and savings habits, it encourages rapacious leverage acquisition behavior (which we're seeing in the fucking consumer housing market how nuts is that). The fed should have some wheel that could introduce random 4% swings every six months that would hopefully disrupt the private equity leveraged buyout schemes, but who am I kidding, it would just lead to some ridiculous speculation/betting on what the next random modifier to the base interest rate is. Perhaps, rather than offering good interest rates to large companies and hedge funds / private equity, there should be special low interest rates for single house owners, but businesses actually have to pay higher interest rates for commercial ventures. Of course someone would figure out a scheme to get individuals to overprovision their mortgages and then back-assemble the excess debt with kickbacks to route it to other uses. There has to be some way to have low interest rates to help out the "little guys" but make big biz and stock market leverage/margin buying pay a higher interest rate. If you have a high interest rate, it just benefits banks and the rich, who are the only people that have "real money", in case anyone actually does have "real money".

dougSF70 4y ago
I kinda agree, low interest rates get countries into trouble that only a panademic can reset.
friendzis 4y ago
> Of course someone would figure out a scheme to get individuals to overprovision their mortgages and then back-assemble the excess debt with kickbacks to route it to other uses. Legally mandated LtV < 1 based on `min(sale, appraisal)` would pretty much hinder such schemes. You can always sell your house to your child/parent and get equity back into the family anyway, but in general this would mean mortgage (real estate leveraged financing) could only be used to finance the sale.

sfe22 4y ago

Government imposed low interest rates are the opposite of free market capitalism.

throwaway049 4y ago
Commercial lenders are free to lend at higher rates. What do you mean by 'government imposed'?
- sfe22 4y ago
  The fed sets interest rates, not the free market.

flashfaffe2 4y ago

Low Interest-->Crony capitalism in a real free market loss would have occurred by the accountable people.