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Increasing interest rates should have the reverse effect. A lot of crazy financial instruments depend on low interest rates to work. When interest is increas
by throwawaymaths 3y ago
Increasing interest rates should have the reverse effect. A lot of crazy financial instruments depend on low interest rates to work. When interest is increased, the price of money goes up; the wealthy are bouyed far more by ZIRP than someone say in the tenderloin, who does not have access to high finance.
- tomfunk 3y agowhat financial instruments?
- hammock 3y agoAny kind of carry trade, anything with leverage, even alternatives like crypto
- throwawaymaths 3y agoShorts, options
- judge2020 3y agoIncreasing rates is their attempts to bring inflation back to normal, since cheap money is cheap for _everyone_, including all Americans that were eager to get a low monthly payment on cars/houses (as I’ve alluded to), not just for existing collateral but for new homes/cars, thus increasing total demand - and that demand leading to price increases across the board.
- throwawaymaths 3y ago> Americans that were eager to get a low monthly payment on cars/house You're still describing relatively rich people. Those price increases really hit everyone else hard. Moreover those loans are small fry compared to leveraged investment.