101–110 of 147 posts
Earlier quoted context omitted.
Do you have a source for your money velocity claim? Intuition implies it would be the opposite
How so? It checks with my intuition quite fine. Do you mean as a total volume of dollars earned?
They don't take their extra $100K and stick it under a mattress.
This Danish bank has a -0.5 percent interest rate. Source (in Danish language): https://www.jyskebank.dk/bolig/nyheder/realkredit-med-negati... It still looks like it'll actually be over 0 percent with fees and costs.
Excuse me what? If something is already negative interest rate, how would fees and costs (which are also negative) push that to 0?
Earlier quoted context omitted.
over half of the American population owns less than nothing Median net worth is $97k, and between 80 and 90 percent of households are above zero: https://dqydj.com/net-worth-brackets-wealth-brackets-one-per...
I'm basing that claim on this: https://www.peoplespolicyproject.org/2019/06/14/top-1-up-21-... https://www.federalreserve.gov/releases/z1/dataviz/dfa/ >To derive this, I initially take the nominal net worth aggregates for each wealth group that are provided by the Federal Reserve and subtract out consumer durables. Consumer durables are things like cars and fridges that many academics who work on wealth distributions…
This Danish bank has a -0.5 percent interest rate. Source (in Danish language): https://www.jyskebank.dk/bolig/nyheder/realkredit-med-negati... It still looks like it'll actually be over 0 percent with fees and costs.
Excuse me what? If something is already negative interest rate, how would fees and costs (which are also negative) push that to 0?
With negative mortgage interest rates you might borrow $200K and only pay back $190K, but if there are $10K in fees, then you're net interest rate is 0%.
When I see people defend negative interest rates, I am reminded of this saying by Orwell: "One has to belong to the intelligentsia to believe things like that: no ordinary man could be such a fool." >>One likely factor behind the savings glut and negative interest rates is negative “time preference.” Once upon a time, economic theory maintained that people always value today’s consumption more than tomorrow’s consump…
(All of the above is completely without source or further arguments or detailed analysis available, just my thoughts.)
Obviously this article shows up when the negative rates are already here, with the benefit of hindsight. What I am more interested in at this point is what is a good, safe alternative for a small time investor who’s already overweight on equities and housing. Bonds used to be the sensible pillar that worked at times when stock market crashed and now it doesn’t really make sense to use them for a small guy.
Earlier quoted context omitted.
How so? It checks with my intuition quite fine. Do you mean as a total volume of dollars earned?
Wealthy people are likely to invest any cash received immediately which would be invested or loaned out to businesses that purchase things and pay salaries. They don't take their extra $100K and stick it under a mattress.
Let's say you "invest" in the stock market. Does that actually cause any business to "invest" more? The answer is likely no. It'll drive up the stock prices of the company whose shares you buy, yes, but companies don't tend to make investment decisions based on their share price.
Conversely, companies do make investment decisions based on the demand for their products, so giving money to poor people who immediately spend it is likely to cause more (real world) investment than giving it to rich people who merely "invest" it.
I don't understand why people are just shrugging off the adjective 'naturally'. Interest rates in the present system aren't natural, they are set by the central banks. A system where a small number of central bankers choose a number might be a good system, but to call it natural is an abuse of language. If the 'natural' rate for lending money was 10%, we'd never be able to find it because the US, European and whichev…
which part of savings glut do you not understand?
The point is, we wouldn't know if we had one because that the interest rates are a number being chosen by a small committee. We might not have a savings glut, we might have a natural rate of interest at 10% that is being suppressed by central banks.
There is a minor pension crisis in the United States and their infrastructure is not in great shape. That doesn't make it look like there is a savings glut. There is a lot that needs to be done.
When I see people defend negative interest rates, I am reminded of this saying by Orwell: "One has to belong to the intelligentsia to believe things like that: no ordinary man could be such a fool." >>One likely factor behind the savings glut and negative interest rates is negative “time preference.” Once upon a time, economic theory maintained that people always value today’s consumption more than tomorrow’s consump…