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???

  • @timeisart
    53•1 year ago

    Is capitalism dying or will it just get more and more ruthless until like 10 people have 99.999% of the wealth? Is there a difference? Either way it seems like humanity will have to make a choice soon whether we want to keep propping up a system that has fundamentally failed them.

    • 𝕽𝖚𝖆𝖎𝖉𝖍𝖗𝖎𝖌𝖍
      16•1 year ago

      Laissez-faire economics and libertarian ideals (a-la Atles Shrugged) destroy society. I don’t know that anyone has nailed down a good balance of personal liberty, social justice, and (individual) wealth; I suspect one of the nordic models is closest, but fuck if I know.

      What I’m pretty sure of is that countries with laissez-faire models are like virulent diseases. They’re aggressive and successful, until they kill the host and collape. To compete, other countries have to adopt similar models. I think the host in this metaphor is the planet, but we’re seeing some indication that the social immune system in the US is responding, with a resurgence on union activity. And it’s possible that one of nature’s balancing tools (diseases such as COVID, SARS, etc) will help with the environmental impact; I don’t see that as a global community we’re doing so well at managing our environmental resources responsibly, so if nature doesn’t cause a great purge, we may simply extinct ourselves and moot the issue.

      Edit: Whilst I’m preaching… I believe capitalism is the best economic system we’ve found. I believe some tools in capitalism have unintended, and deleterious consequences. In particular, the stock market, and usury. Both are tools that generate money directly from money (“investing” and “interest”), and both IMHO are responsible for most of the excesses of capitalism.

      • @[email protected]
        8•1 year ago

        Nordic models are a mix of social democracy and corporatism. Definitely not free and definitely not the answer.