Re:FTX’s Collapse Was a Crime, Not an Accident
by FabHK on Wednesday November 30, 2022 @07:32PM
(#33810434)
> interest rates should be vaguely proportional to risk.
Not really. If we take nominal interest rate = real rates + inflation expectation + credit spread, then only the (counter party dependent) credit spread reflects riskiness. Real rates reflect an equilibrium of time preferences.
Not really. If we take nominal interest rate = real rates + inflation expectation + credit spread, then only the (counter party dependent) credit spread reflects riskiness. Real rates reflect an equilibrium of time preferences.