INTEREST RATES AND SUPPLY CHAINS
#krisonomics teaches that Higher Rates does convert to higher output and lower rates do convert to lower output.
This is very simple to explain.
1/
#krisonomics teaches that Higher Rates does convert to higher output and lower rates do convert to lower output.
This is very simple to explain.
1/
Who would lend money at 0% for 20 years to somebody else?
Any takers?
You get the point folks?
Lending dries up at 0%.
Hence output dries up, as it has.
2/
Any takers?
You get the point folks?
Lending dries up at 0%.
Hence output dries up, as it has.
2/
It's been like that 5000 years folks, non stop.
Lenders lend at adequately high rates to compensate for the risk of not getting payback.
It's standard procedure for 5000 years folks.
Why would you be surprised?
3/
Lenders lend at adequately high rates to compensate for the risk of not getting payback.
It's standard procedure for 5000 years folks.
Why would you be surprised?
3/
Walter Bagehot, in England, in 1864 noticed that at lower than 2% the economy dries up.
I'm not saying anything special here, just standard procedure for 5000 years of human economics.
4/
I'm not saying anything special here, just standard procedure for 5000 years of human economics.
4/
That is why if the Fed raises interest rates, then it truly prints manufacturing, grain production, oil production, it prints true, real economy, because.........LENDERS LEND.
My personal estimation is for the real economy lending to pick up, US needs 5% rates for now.
5/ END
My personal estimation is for the real economy lending to pick up, US needs 5% rates for now.
5/ END
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