3 ms·
> Zero interest rate is like steroids. The problem with your analogy is that paying interest is an active measure. It takes effort. The higher the rate*(outsta
by schmidtleonard 2y ago
> Zero interest rate is like steroids.
The problem with your analogy is that paying interest is an active measure. It takes effort. The higher the rate*(outstanding debt), the more effort. This isn't a choice between injecting nothing vs injecting steroids, it's a choice between injecting sedatives vs injecting nothing. Raising the interest rate is like injecting a sedative. How much sedative should we inject? How much sedative can we inject?
- Vegenoid 2y agoI disagree, as this implies that an interest of zero is the normal default. Why would it be? Why would someone lend someone else money, when they get nothing for it?