Re:Forget Wall Street, worry about fintech
by adventured on Wednesday October 11, 2017 @04:49PM
(#15453344)
The interesting part about being perhaps due for a recession, is the role of the Fed's hyper low rate policy.
The US has never had such low rates for such a long period of time. Will we trade mediocre economic performance for perpetually cheap debt & interest rates, in other words.
Huge mountains of debt motivated by its low expense (whether eg at Apple or at the Federal level), sapping economic expansion potential as capital is diverted and mal-invested (eg IBM and GE financial engineering) and debt costs grow ever larger, combined with perpetually low rates that feed a loop of addiction and harm.
It's a form of the Japan scenario. Why didn't low rates in Japan spur faster economic expansion and massive inflation? Economic velocity plunged because an ever greater share of their capital available for investment was going to service debt. It explains in part why the US economic 'recovery' has been so slow compared to the past (the early Obama Administration GDP growth forecast projections coming out of the recession, missed by a mile).
The US has never had such low rates for such a long period of time. Will we trade mediocre economic performance for perpetually cheap debt & interest rates, in other words.
Huge mountains of debt motivated by its low expense (whether eg at Apple or at the Federal level), sapping economic expansion potential as capital is diverted and mal-invested (eg IBM and GE financial engineering) and debt costs grow ever larger, combined with perpetually low rates that feed a loop of addiction and harm.
It's a form of the Japan scenario. Why didn't low rates in Japan spur faster economic expansion and massive inflation? Economic velocity plunged because an ever greater share of their capital available for investment was going to service debt. It explains in part why the US economic 'recovery' has been so slow compared to the past (the early Obama Administration GDP growth forecast projections coming out of the recession, missed by a mile).