Re:Low interest rates in advanced countries have pushed mone...
by andrewmutz on Wednesday November 24, 2021 @03:53PM
(#29335010)
> As interest rates are lower, the discount on future cash flows decreases
That is one of the causes of high asset prices. Another is that cheaper debt allows more people to borrow money to buy assets.
> If paper wealth takes a shit the people that will be impacted will be retirees and the wealthy, not your average joes.
If paper wealth drops average joes will also be affected. Employment depends on consumer spending, and a big drop in asset prices can have a significant impact on spending through wealth effects (https://en.wikipedia.org/wiki/Wealth_effect)
That is one of the causes of high asset prices. Another is that cheaper debt allows more people to borrow money to buy assets.
> If paper wealth takes a shit the people that will be impacted will be retirees and the wealthy, not your average joes.
If paper wealth drops average joes will also be affected. Employment depends on consumer spending, and a big drop in asset prices can have a significant impact on spending through wealth effects (https://en.wikipedia.org/wiki/Wealth_effect)