I think this is a more exciting market to operate in as opposed to one where we simply need to raise and spend cash as quickly as possible.
I'm one of these people who was absolutely terrible in this low-rate environment. At least I got to learn about some of the reasons why I absolutely suck at it.
One of my worst character traits is that I'm missing the hair-trigger opportunist factor (AKA "you've got one shot" factor) and this is precisely one of the traits which was rewarded heavily by the low-rate environment since it tends to reward first movers disproportionately.
I think I might be one of those, but I lack the contextual information/knowledge to act on it.
With high interest rates, there is an increased incentive for investors to just park their money into savings accounts instead of putting it to work (competing against small businesses) in the markets.
But how do we even know what this is anymore? With more than half the wealth accumulated by the top fraction of society it seems like ultra-luxury goods are going to be the most profitable, but surely that's not actually genuine value creation.
And have we strayed too far to achieve that without austerity? How will we pay interest on the national debt?
Even ultra luxury good creators rely a lot on other stuff, like manufacturing machines, hardware, parts, materials, etc. So the safer bet is probably going to be to sell shovels in a gold rush.
Haha what?
> Europe was so organized socially and economically as to secure the maximum accumulation of capital. While there was some continuous improvement in the daily conditions of life of the mass of the population, Society was so framed as to throw a great part of the increased income into the control of the class least likely to consume it. The new rich of the nineteenth century were not brought up to large expenditures, and preferred the power which investment gave them to the pleasures of immediate consumption. ... If the rich had spent their new wealth on their own enjoyments, the world would long ago have found such a régime intolerable. But like bees they saved and accumulated, not less to the advantage of the whole community because they themselves held narrower ends in prospect.
> Thus this remarkable system depended for its growth on a double bluff or deception. On the one hand the laboring classes accepted ... a situation in which they could call their own very little of the cake that they ... were co-operating to produce. And on the other hand the capitalist classes were allowed to call the best part of the cake theirs and were theoretically free to consume it, on the tacit underlying condition that they consumed very little of it in practice. ... And so the cake increased; but to what end was not clearly contemplated. Individuals would be exhorted not so much to abstain as to defer, and to cultivate the pleasures of security and anticipation. Saving was for old age or for your children; but this was only in theory,—the virtue of the cake was that it was never to be consumed, neither by you nor by your children after you.
Most countries hold USD reserves/bonds.
If US prints money, the wealth of all countries holding USD goes down. While the wealth of US increases.
Since US started this monetary policy of easy money printing, they have been "bombing" the rest of the world, violence-free, ammunition-free and uranium-free.
I am not an American, but if I were, I would be pretty happy about it. Yes, it would affect me and my neighbors, but in the end I would be getting a net benefit.
The real beauty is how the other countries don't even fully realize this is happening to them and the people who do realize (finance ministries, central bankers, etc.) are kept rich enough to not talk about it too much.
But they don't, because they'd lose a lot more wealth if they held it in pesos, rupees or lira than USD.
In fact the story of the last decade has been one of significant increases in the purchasing power of wealth held in dollars compared even with currencies of reasonably stable Western developed economies.
True, yet average Americans lose out because their savings get eaten away by inflation
People keep saying this. But hasn't it almost always been true, almost everywhere? Apart from some rare exceptions, such as people using livestock as money.
This managed to fund a war with the Spanish empire that owned almost all silver mines.
Paper won against hard currency. And the rest is history.
The idea that interest rate has to be at least 2% above the inflation will cut and hurt. It is not about the 0 interest rate. But the inflation and the difficulty and having the political will to let the central bank (and they have the clear head) to do the right thing, guy.
So far only USA seemed working. And if war in Europe and later in pacific rim ongoing, once again we have USA.
IMO, a low interest rate environment is about luck, first mover advantage and media exposure. A high interest rate environment is about value creation. IMO, as interest rates increase, many successful people of the past decade are going to wake up to a new reality; those who have the humility to understand that they were lucky will be able to adapt their strategy to suit the new environment but most will go out of business.
I believe that in this new high interest environment, some people who were previously unsuccessful will thrive while some who used to be successful will start failing. The majority of investors will not be able to escape the mindset that they should only invest in successful people (since that has worked consistently in the past) and they will end up chasing loss after loss and not understand why their proven strategy of track-record-based investing is no longer working.