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> Zero interest rate is like steroids More like adding fat and never burn it. Zero interest means everything stays around, no pressure to produce since there i
by Jensson 2y ago
> Zero interest rate is like steroids
More like adding fat and never burn it. Zero interest means everything stays around, no pressure to produce since there is no expectation of ROI, and then when you suddenly add that pressure a lot of stuff collapses under their own weight since they don't have anything to keep it up.
- sangnoir 2y agoI'll be the devil's advocate. Zero interest rates means it's easier for startups to raise money. High interest rates locks in the status quo - because of their massive war chests big companies don't struggle because of high interests, but small companies do. For individuals in the middle class and lower, high interest rates (and the associated inflation) directly lower the quality of life by eroding their purchasing power.
- usefulcat 2y ago> high interest rates (and the associated inflation) directly lower the quality of life by eroding their purchasing power. This confuses me. Rates were raised to reduce inflation. How should inflation have been reduced, if not (at least in part) by raising rates?
- hattmall 2y agoRaising rates, can only lower inflation if there isn't large excess cash. The rate raising was also quite a bit of a smoke screen because the money kept flowing via reverse repos. All that changed was who had access to it. The normal borrower can't get unlimited 1 second loads with a 24 hour settlement period. Raising rates didn't lower housing prices, it just empowered cash buyers to become landlords.
- alex_lav 2y ago> Raising rates didn't lower housing prices, I have not observed this statement to be true, both in my personal experience and that of those around me.