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This works great until it doesn’t. Interest rates are rising and debt isn’t as cheap as it was. At some point it will be unsustainable but we just don’t know wh
by Nicholas_C 3y ago
This works great until it doesn’t. Interest rates are rising and debt isn’t as cheap as it was. At some point it will be unsustainable but we just don’t know when. I fear that we will push the limits on this until it’s too late.
- MuffinFlavored 3y ago> Interest rates are rising This doesn't affect old debt unless it needs to be refinanced. Only new debt. Plus, interest rates will most likely not be 5-6% within the next 12-36 months. Will they be higher than they were at 0.25%? Yeah, probably. But isn't a 2-3% interest rate "healthier"? It provides alternative investment options instead of "let's all pile into equities even though valuations are already detached and the entire market is trading at 35.96x (which it was at Jan 1, 2021)"
- tunesmith 3y ago> This doesn't affect old debt unless it needs to be refinanced. That's a really big unless. That's the whole point.
- MuffinFlavored 3y agoHow much debt is refinanced at what rate/how often versus new issue?
- Panzer04 3y agoA lot of non-government debt is likely to be floating rate. America is somewhat unique, with a large consumer fixed debt market in mortgages thanks to government subsidies, but that's not the norm.