Re:How this Ends
by pjc50 on Thursday February 18, 2021 @09:13AM
(#26179985)
> This ends in hyperinflation.
The system is structured to prevent even the slightest bit of inflation by raising rates. The Fed has not forgotten that, and the politics of mass unemployment are readily manageable. Years of conservativism has seen to that. Call me back when inflation exceeds 4%. It's currently below the 2% target.
Look, interest rates are the market price of money. Money - investment - is not scarce. That's where the asset bubbles are coming from, after all. And it's not just a question of money creation, it's wealth creation and concentration that's driven this. Everything from Apple's cash pile to the unaccountable wealth of Saudi and Russian fossil fuel extractors to all the capital flight from China that's been bloating Western real estate markets.
The world is awash with money looking for a return which it simply can't find any more. Maybe my most controversial opinion is that if we don't get wealth taxes we'll end up having to have negative interest rates anyway. Something has to pay for the preservation of society around the pile of wealth. Switzerland has been doing good business charging people for stability with negative rates: https://edition.cnn.com/2020/01/23/investing/switzerland-cas...
Let's not forget the pension funds. Something like a third of a Western society is basically forced to be bond investors - they need low-volatility investments and annuities.
> Retirees have an incentive to keep them low, feeding 401K bubbles that they need to live on.
... they tend to be the main complainers about low rates since they live more off interest rates than asset prices and don't have mortgages.
The system is structured to prevent even the slightest bit of inflation by raising rates. The Fed has not forgotten that, and the politics of mass unemployment are readily manageable. Years of conservativism has seen to that. Call me back when inflation exceeds 4%. It's currently below the 2% target.
Look, interest rates are the market price of money. Money - investment - is not scarce. That's where the asset bubbles are coming from, after all. And it's not just a question of money creation, it's wealth creation and concentration that's driven this. Everything from Apple's cash pile to the unaccountable wealth of Saudi and Russian fossil fuel extractors to all the capital flight from China that's been bloating Western real estate markets.
The world is awash with money looking for a return which it simply can't find any more. Maybe my most controversial opinion is that if we don't get wealth taxes we'll end up having to have negative interest rates anyway. Something has to pay for the preservation of society around the pile of wealth. Switzerland has been doing good business charging people for stability with negative rates: https://edition.cnn.com/2020/01/23/investing/switzerland-cas...
Let's not forget the pension funds. Something like a third of a Western society is basically forced to be bond investors - they need low-volatility investments and annuities.
> Retirees have an incentive to keep them low, feeding 401K bubbles that they need to live on.
... they tend to be the main complainers about low rates since they live more off interest rates than asset prices and don't have mortgages.