Asklemmy

43746 readers

1347 users here now

A loosely moderated place to ask open-ended questions

Search asklemmy 🔍

If your post meets the following criteria, it's welcome here!

Open-ended question
Not offensive: at this point, we do not have the bandwidth to moderate overtly political discussions. Assume best intent and be excellent to each other.
Not regarding using or support for Lemmy: context, see the list of support communities and tools for finding communities below
Not ad nauseam inducing: please make sure it is a question that would be new to most members
An actual topic of discussion

Looking for support?

Looking for a community?

Lemmyverse: community search
sub.rehab: maps old subreddits to fediverse options, marks official as such
!lemmy411@lemmy.ca: a community for finding communities

~Icon~ ~by~ ~@Double_A@discuss.tchncs.de~

founded 5 years ago

MODERATORS

397

Why is everything going to shit? (feddit.de)

submitted 1 year ago by Knusper@feddit.de to c/asklemmy@lemmy.ml

123 comments fedilink hide all child comments

Was just trying to explain to someone why everything is going to shit, specifically companies, and realized, I don't fully get it either.

I've got the following explanation. The sentences marked with "???" are were I'm lost. Anyone mind telling me, if they're correct and if so, why?

The past few years, central banks were giving out interest rates of 0% or even negative percentages. Regular banks would not quite pass this on, but you could still loan money and give it back later with no real interest payments.

This lead to lots of people investing in companies. As long as those companies paid out more money than those low interest rates, it was worthwhile. But at the same time, this meant companies didn't have to be profitable, because they could pay out investors from money that other investors gave them???

This has stopped being the case, as central banks are hiking interest rates again, to combat inflation???

you are viewing a single comment's thread
view the rest of the comments

[–] JeffCraig@citizensgaming.com 7 points 1 year ago (1 children)

There isn't an easy statement that explains why things are getting worse.

The housing market, for instance, was being affected by low interest rates. Low rates make being a slum lord more profitable than other forms of investment. This caused a massive amount of investment in the housing market by rich people and corporations, and normal people were priced out.

The banks that failed did so because they either invested in dumb things (crypto) or in long-term bonds. Those bonds lose value as interest rates rise, and SVB invested far too much into them.

There's all kinds of reasons

[–] ImplyingImplications@lemmy.ca 1 points 1 year ago* (last edited 1 year ago)

Yes economics is the study of how people determine what is valuable and how valuable things are divided. People are complex and irrational so it's difficult to come up with a simple explanation of economic trends.