Thread by @ektrit

INTEREST RATES BOOST PRODUCTION

tradingeconomics.com/united-states/…

Look at the graph of US interest rates.

Can you spot the most prosperous and productive period of history since the 70s?

1/

The most productive period in US history post WW2 was when rates were 20%, US kept thriving when rates were kept above 5%.

But why?

Why do high rates spur production?

2/

Simple, folks.

You DO NOT have to borrow money to start a business.

To reiterate, YOU DO NOT HAVE TO BORROW MONEY TO START A BUSINESS, when rates are above 5% permanently.

3/

Why?

Because medium level rates, 5-8% make it impossible for the financialization of commodities.

Commodities would be used ONLY for productive deeds, not as money in shadow banking rehypothetication.

5/

Cheap commodities and cheap energy makes makes possible to boost an economy WITHOUT DEBT.

Let me reiterate:

Cheap commodities and cheap energy makes makes possible to boost an economy WITHOUT DEBT.

6/

Let me reiterate:

Cheap commodities and cheap energy makes makes possible to boost an economy WITHOUT DEBT.

YOU DON'T NEED MUCH DEBT to start, run and expand a business when COSTS OF DOING BUSINESS ARE LOW.

7/

YOU DON'T NEED MUCH DEBT to start, run and expand a business when COSTS OF DOING BUSINESS ARE LOW.

Most operations will be self funded, without need for debt.

Expansions would require little debt as well.

8/

The Government CAN do major infrastructure plans ONLY IFF commodities and energy are abundant (cheap).

Let me reiterate:

The Government CAN do major infrastructure plans ONLY IFF commodities and energy are abundant (cheap).

9/

5%-10% interest rates are an immense incentive to create businesses as the dreams of making money from money would spur human animal spirits.

10/

So, to summarize the effects of 5-10% rates:

1) Cheap commodities and energy
2) Low Cost of doing business
3) No need for much debt to do business
4) Financialisation of commodities goes to 0, because 5-10% rates is far too high a profit, can't be made via rehypothetication

11/

6) Animal spirit of making money from money would spur people produce excessively to save money, hence rise of prosperity.

PROSPERITY = ABUNDANCE

12/end

#krisonomics