/biz/ - Business & Finance

they don't.
Keynes is going to be the Hitler of the next generation

>>14225946
Meaning that he will be worshipped here ?

>>14225897
the money is not backed by anything...

its all irrelevant now...

its 1s and 0s on a computer

In US, cash deposits in bank are only insurec up to 250k. There is no way to hold more than 250k in cash safely and so have to hold bonds. Some funds, like social security, legally have to hold funds in bonds. Also, during periods of deflation, real rates can be positive while nominal rates are negative.

But yeah it's fucked. If rates go negative again that will be all the more reason to dump money in crypto.

>>14225897
many banks and funds have to hold a certain amount of their reserves in bonds due to regulations. and then the central banks are also buying the bonds with their QE programs, which means traders are willing to drive the rates well below zero intending to profit from the appreciation in the bond's value by front-running these forced buyers. the trick is not to be a bag-holder when they mature because you literally get a haircut on your investment at that point

>>14225897
The only places with negative interest rates are place's like Sweden where it's implicitly understood that you lose a fraction in exchange for keeping it untraceable, and Japan where the central bank owes the majority of assets anyway so it's zero sum.

>>14226669
>implying

>>14225946
This, fuck keynsians long live Satoshi Nakamoto

>>14225897
It's like buying gold, but real.

>>14226604
It's a bit more complicated than that, and you can get over $250k in insured deposits.

https://www.fdic.gov/deposit/deposits/brochures/deposit-insurance-at-a-glance-english.html
>The standard insurance amount is $250,000 per depositor, per insured bank, for each account ownership category.
>The FDIC provides separate coverage for deposits held in different account ownership categories. Depositors may qualify for coverage over $250,000 if they have funds in different ownership categories and all FDIC requirements are met.
>All deposits that an accountholder has in the same ownership category at the same bank are added together and insured up to the standard insurance amount.

Additionally, when you consider holding cash "safely", you can do that using safe deposit boxes, private safes, and probably other ways as well. You can also use overseas accounts at reputable banks, like in the Cayman Islands or Switzerland. The real question is why you would want to hold such large amounts of cash for any length of time. It's better to keep a small rainy day fund at the FDIC limit, an apocalyptic store of gold, silver, guns, and ammunition, and put the rest of your money to profitable investments.

>>14226778
Unless you have 10s of millions or billions of dollars, use multiple banks or I don't see the issue.

>>14226669
why high iq countries use negative interest rates?

>>14225897
Hol' up bro, lemme just look up some stuff about using foreign exchange forward contracts.

>>14227374
https://www.forbes.com/sites/vineerbhansali/2019/06/17/trading-sardines-the-case-of-currency-hedged-negative-yielding-bonds/#5a8901825f70

>Now on to the financial alchemy that in the short run can potentially turn negative yields into positive yields. Readers know that due to interest rate parity, a currency with a lower interest rate trades at a higher exchange rate in the future. For instance, if we look at the exchange rate for the Euro vs. USD, the one-year implied forward exchange rate (which is very much tradable as a forward or as a swap), is about 3 cents per Euro higher than the spot exchange rate (Source: Bloomberg)

>The implied forward exchange rates for any pair of currencies is determined by the spot exchange rate, the differential of the money market rates for that tenor and the cross-currency basis swap, which essentially measures the demand and supply mismatch for the two currencies. For the purpose of this discussion we don’t need to understand the details of the basis swap. The only thing that the reader needs to know is that if he buys a German Bund at a negative yield of -0.25%, and then if he hedges the currency risk by selling the Euro currency forward to convert the proceeds over the hedge horizon into dollars, he is selling the forward exchange rate at a higher price than the spot exchange rate, so the difference between the forward exchange rate and the spot exchange rate can be considered additional “yield” coming from the hedge.


>This forward currency hedging generates about 3%, so when we add 3% to -0.25%, we now have a negatively yielding ten year German Bund yielding +2.75% for a US investor!

>>14226986
Because some people value security over risk.

>>14227529
So, if I'm understanding correctly, because of Interest Rate Parity (https://www.investopedia.com/terms/i/interestrateparity.asp)), the forward exchange rate for the currency with the negative yield will be HIGHER.

So, if you Buy a negative yielding bond, and hedge with a corresponding Forward Exchange Rate contract, when the Bond matures, and you receive the proceeds, you then fulfill the Forward contract obligations, and end up with an Overall Gain, because you locked in a higher exchange rate conversion

>>14227552
Only if you take a ridiculous theory about exchange rates a year out as gospel and literally nothing happens to upset your plans, then yeah it'll work out.

You could also just be a stinky linkie and have the same odds of success.

>>14227529
Is this because dollars are anticipated to be more inflationary than euro?

>>14225946
Keynes didn't try to save humanity from (((them))).

>>14227986
>To calculate the forward rate, multiply the spot rate by the ratio of interest rates and adjust for the time until expiration. So, the forward rate is equal to the spot rate x (1 + foreign interest rate) / (1 + domestic interest rate).

from here:https://www.investopedia.com/terms/f/forwardpremium.asp

Let's compare Euro to USA, using the EUR/USD pair

let's assume the spot rate = 1.1180 (1 EUR Buys 1.1180 USD)

Let's assume the US (foreign rate) is at 5%, and Euro is at -2.5%

1.1180 * ([1 + 0.05] / [1 + -0.025]) = 1.204

That's what the Forward Exchange Rate "should" be so that if someone were to BORROW Euros, and LEND that amount for USD, after they converted back to Euros, they'd have made no gains (in terms of Euros), and therefore no arbitrage profits would be made.

This is because the EUR/USD Exchange Rate would have increased to 1.2040, and so they'd receive less Euros when converting back from USD (after they had lent at the higher interest rates).

>>14227986
Forward Rates are essentially what future exchange rate of a pair needs to be so that borrowing from the lower rate country and lending to the higher rate country ends producing no profit, overall.

In this case, if Euro yields are negative and US Yields are positive, EUR/USD will rise (theoretically) to cancel out arbitrage profits

>>14227986
However, this also means that someone who's dealing in Euros (not Borrowing), and wants to recoup losses/make money overall after investing in Negative Yielding European Bonds, can actually lock in a higher EUR/USD exchange rate (because of the interest rate differential, creating higher future EUR/USD) and make a "gain" from that, as mentioned there: >>14227529

>>14229464
https://www.investopedia.com/articles/forex/08/interes-rate-parity.asp

>Uncovered interest rate parity (UIP) states that the difference in interest rates between two countries equals the expected change in exchange rates between those two countries. Theoretically, if the interest rate differential between two countries is 3%, then the currency of the nation with the higher interest rate would be expected to depreciate 3% against the other currency.

>In reality, however, it is a different story. Since the introduction of floating exchange rates in the early 1970s, currencies of countries with high interest rates have tended to appreciate, rather than depreciate, as the UIP equation states. This well-known conundrum, also termed the “forward premium puzzle,” has been the subject of several academic research papers.

>The anomaly may be partly explained by the “carry trade,” whereby speculators borrow in low-interest currencies such as the Japanese yen, sell the borrowed amount and invest the proceeds in higher-yielding currencies and instruments. The Japanese yen was a favorite target for this activity until mid-2007, with an estimated $1 trillion tied up in the yen carry trade by that year.

Relentless selling of the borrowed currency has the effect of weakening it in the foreign exchange markets. From the beginning of 2005 to mid-2007, the Japanese yen depreciated almost 21% against the U.S. dollar. The Bank of Japan’s target rate over that period ranged from 0 to 0.50%; if the UIP theory had held, the yen should have appreciated against the U.S. dollar on the basis of Japan’s lower interest rates alone.

This is why I said "theoretically", btw, and also probably what this anon:>>14227639
was referring to

It's a game of musical chairs and whoever ends up with the bonds will get reamed due to reliance on derivatives to make these profitable. Brace for liquidity squeeze.

>>14229362
Oh shit, just a clarification here: the example investopedia gave confused me, as it's quite close to the EUR/USD rate.

For that specific equation, you're meant to have the USD as the base currency.

And so you'd need the rate to be for USD/EUR, NOT EUR/USD.

USD/EUR is 0.8933, same rate assumptions

0.8933 × (0.975 / 1.05) = 0.8295

The USD has still depreciated, relative the EUR (the EUR appreciated, relative to the ISD), and so the other stuff I wrote about should also be correct

>>14230750
*same interest rate assumptions
*USD

>How do countries get away with having negative interest rates?
Check out the link for the BoE (the most open about what they're doing) on the Asset Purchase Facility (It's what they spend QE money on) Hint, they are buying the bonds!
https://www.bankofengland.co.uk/markets/quantitative-easing-and-the-asset-purchase-facility
>Why would anyone invest in their bonds if you lose money in them not only in real terms but in nominal?
Its mainly CB 'buying back' the bonds (see Asset Purchase facility) & ppl that just want a 'safe' place to store funds. My boomer parents buy bonds for this reason, dumb I know.
>>14226659
This also I would guess

>>14226522
>the money is not backed by anything
It is! the future labour of generations!
You lack a understanding on the issuance of debt!
https://www.bankofengland.co.uk/-/media/boe/files/quarterly-bulletin/2014/money-creation-in-the-modern-economy
>>14226604
>>14226778
Have a look at how much this fund in it! In the UK it can only pay for 43k accounts @ full payout of £85k! It was NEVER set up for 'To Big To Fail', aka its a meme
Quit believing in the gov so much, fuck you probably believe in political parties! Yet another MEME

>How do countries get away with having negative interest rates?
Check out the link for the BoE (the most open about what they're doing) on the Asset Purchase Facility (It's what they spend QE money on) Hint, they are buying the bonds!
https://www.bankofengland.co.uk/markets/quantitative-easing-and-the-asset-purchase-facility
>Why would anyone invest in their bonds if you lose money in them not only in real terms but in nominal?
Its mainly CB 'buying back' the bonds (see Asset Purchase facility) & ppl that just want a 'safe' place to store funds. My boomer parents buy bonds for this reason, dumb I know.
>>14226659
This also I would guess

>>14226522
>the money is not backed by anything
It is! the future labour of generations!
You lack a understanding on the issuance of debt!
https://www.bankofengland.co.uk/-/media/boe/files/quarterly-bulletin/2014/money-creation-in-the-modern-economy
>>14226604
>>14226778
Have a look at how much is in this fund! In the UK it can only pay for 43k accounts @ full payout of £85k! It was NEVER set up for 'To Big To Fail', aka its a meme
Quit believing in the gov so much, fuck you probably believe in political parties! Yet another MEME

>>14226437
kek this

>>14225897
So to sum up OP, it's Central Banks, it's Commercial Banks, it's Funds who have requirements, it's Safehaven/Low Inflation expectations buyers, it's Overseas buyers of Negatively yielding bonds (who then turn them into positive yielding investments, using Forward Rate derivatives), and it's people who are playing a Yield Curve which has even more negative short term rates

>>14231865
Good post. Always struck me as odd when people say money isnt backed by anything. If that was the case we wouldnt use it.

>>14225897
It's literally a scam and it's not supposed to work, it's supposed to eventually crash the economy so the jews can buy every asset for pennies on the dollar.

>>14232429
Thanks, have to say its crazy how people on this board, a (((FINANCE))) Board have ZERO clue about 'money'. Please read that 14 page doc from the BoE,if you haven't!

Also check out 'The Grace Commission' its about how your tax funds really get used.
TL:DR ALL tax is used to pay the interest ONLY on the National debt, never the principal. i.e that road your driving on NEVER gets paid for!

I would like to add that real Black pill is that real people/land/commodities have been used to satisfy the (((creditors))) for ALL western nations for at least the last quarter millennia, FIAT is simply a symptom of this issue. It is murky & unless you're willing to dive deep and be willing to look into history most will never figure it out. as such, Most don't understand the 'Sovereign 'Citizen'', stuff & demean it. But once you engross yourself in it...you can start to piece together how the world really works!

I'm to lazy to provide links btw, you create your own path!

>>14225897
>Why would anyone invest in their bonds
nobody does. the bond market is propped up by cenral bank buying.

>>14233280
bro I recognize your posts and you always go on about the grace commission and the bank of england debt creation pdf and your use of exclamation marks
I respect your opinion a lot, do you have any economics related blogs you read? What is your opinion on Steve Keens?

>>14233280
have you read pic related? the nazis had all of this shit figured out and tried to break free from the banking cartel. they literally wanted to run a zero-tax society where the government funds itself by mining operations, postal services, etc. hitler even lowered taxes before WWII. the real black pill is that one nation tried to break free from this slavery, got eternally BTFO and now everyone thinks they were the bad guys.

>>14228301
>>14226437
>Trannies misinterpreting something obvious
The best about this, it doesn't need lies to make it happen, the institutional ground myth for the next generation is about to get written, and not like the last, muah six million, this one will be based on economic, social and political facts. Children will abandon their parents as traitors and let them die and starve for their crimes, this generations politicians will be kept in humanities memory worse than the last Kaisers of Rome, and about the communist dream and vision of the proletarian revolution and the rise of real communis tm, it has been memejacked.

Helter Skelter bitches

>>14225897
because the bonds are guaranteed to go up in money again you retard. That's why negative interest rates don't work in recession, banks know they need to sell high rather than low, ie that's what causes "liquidity traps".
Friedman knew this, that's why he advocated monetarism rather than gov bonds. Keynes is valid in the sense that the government projects can alleviate some of the job supply need, but in the end the only thing that can stop a recession is inflation by raising the money supply of the population, ie printing money.
I mean why do you think we have inflation in the first place, huh? Money is injected in the economy through the bond sell and re-buy mechanisms. Sadly this created money goes to the big banks, who don't use it during recessions. That's why we need a FED cryptocurrency that inflates equally across everyone who holds it.
I will get called a jew probably for saying all this but fuck it, I hate seeing misinformation about stuff that causes people to lose their livelihoods.

>>14230662
whoever ends up with the bonds will get reamed
that would be china and the western tax payer then

>>14233843
Inflation of the currency supply only causes a boom when it increases actual supply, I.E. when allocated into investment rather than consumption.
Inflating everything proportionately (which itself may benefit some far more than others) will do nothing other than cause people to make stupid decisions.

>>14233709
>do you have any economics related blogs you read?
None specifically, I just stumble about, its a subject I am interested in. I generally don't care for the opinions of others, I have a VERY different world view than 99.9% of the population. It leads me to read things differently & investigate.

Check out that Sovereign Cit stuff, Through that I learnt about creditors & how the public/land have been offered & accepted by the creditors as surety for the debt years ago. This creditor issue was the main reason for the Burger civil war BTW. The situation the Zoomers blame the boomers for started WELL before the boomers. I found UK acts where the docs in the registry office (((PERSONS))) where handed over to the BoE, I could find it again, The info is out there & public!

Best of luck on your journey

>>14233737
Never read that, but the Nazi were fucked as Britain wanted to rule the world (it still does through Burgerland), Use the 'Opium wars' as an example. It took Germany to the same place of an occupied nation.
> the real black pill is that one nation tried to break free from this slavery, got eternally BTFO and now everyone thinks they were the bad guys.
Agreed, bong here

>>14233737
Image being this retarded. LOL.
Fuck off NAzi scum.

>>14233886
Except people will buy more stuff, which will increase business revenue and in turn open up more money for extra jobs and investments by the people who actually care about creating value now (rather than big banks who can afford to wait)

>>14233916
>People will buy more
How, if their stagnating wages and FIAT going to be worth shit. The majority will be happy if they make means end. And nobody is going to get into debt to buy the newest spyphone or a holiday in bong land. Delusional Keynesians

>>14233957
It's not Keynesian it's monetarism. Keynesian is creating jobs by gov investments. Monetarism is expanding the monetary supply.
People will buy stuff if given extra money for nothing, because they know that that means holding the money will only cost them in value.
If you were holding this theoretical FED cryptocurrency, and they doubled the monetary supply (say an indiscriminate IEO with an equal drop to every citizen), you'd obviously want to get rid of the currency by spending it before they do it again.

>>14234011
Monetarism and Keynesian brainfarts go hand in hand.
>FED crypto
>he doesn't know
poor sheep, poor sheep, you will most probably die with your panties down. Crypto will not save them. And stop to assume economics is hard science, the most important factor in it is trust, and trust will not be regained with some 0 and 1, some random protocol and a few nice stories.

>>14234033
You're wrong, the most important factor is incentive. Trust isn't worth shit in an economy, if you're going to rely on the 'inherent good' of man I got news for you: no economy can run on that. If there's something to exploit, people will.

>>14234078
>Humans are rationaly acting homo economicus
>RRRRRRRRRRRRRRRRREEEEEEEEEEEEEEEEE
I see I'm talking to a religious person. Consider yourself not wort my time

>>14234111
Sorry you're right, I should've realized that all it takes to fix the economy is some good ol' trust. Lmao.

>>14234127
Listen you fucking fartbrain, I had unfortunately during my life enough conversations with the like of you, ideological morons who couldn't jump over their own shadows and assuming what their econ professors told them was gospel. You know how I usually ended the conversation when we came to the nature of humans point, I hit them in the stomach, ramed them my elbow in the face, brought them to the ground, put my knee on the throat while either raising my fist or holding a knife and asking them where their rationality is now.

>>14233916
Buying more stuff doesn't generate resources. The resources obtained by the person gifted the inflated money would have otherwise ended up with another individual.
Increased demand in the consumer goods sector will reallocate investment towards consumer goods instead of factors of production used further down the supply chain.
Allocation will simply shift into the creation of consumer goods, and will then snap back - liquidating the shifts into the consumer sector - once the inflation ceases to be injected.
Capital stock will decrease since it has become a less profitable sector, and this will lead to capital liquidation brought on by shifting society towards a focus on the production of consumption resources rather than production resources.
The 'higher profit' visible to businesses doesn't actually exist, any more than it would exist if you were to simply alter the minds of all businessmen to increase the confidence in their investments.

If you give it to investors instead of consumers, the reverse happens.

If you give it to both equally, nothing happens other than a disruption of people's ability to calculate. Resources cannot be created from nothing. They become allocated from somewhere, to success or failure.

>>14234078
>Trust isn't worth shit in an economy.
This is wrong. High-trust societies perform better than low-trust societies.
It's obvious that trust is worth shit in an economy because there exists a giant market in bridging gaps and facilitating interaction between people where trust is lacking. If the trust were there, these resources would be free to produce elsewhere.
It's not all-important, but it's worth quite a bit. Nor is it reliable.

>>14234188
if you can't trust your business partner, costs rises, in the worst case like above example costs can be your life and the end of any economic trade off for (you). Unfortunately too many faggots need to watch into deaths eyes to realize this

>>14226747
>Gold moves up
>Anti gold shills appear
Like clockwork.

>>14234155
The funny thing is that your whole rational shazam is just strawmanning me, I never said I believe in rational humans, just in incentives over trust. Incentives can be deception.
Also, fight me irl faggot.

>>14234179
>Buying more stuff doesn't generate resources.
It generates incentive to produce resources.
>Increased demand in the consumer goods sector will reallocate investment towards consumer goods instead of factors of production used further down the supply chain.
Factors of production are in turn incentivized by demand lower down the supply chain. It's called a chain for a reason.

>>14234404
you don't get the lesson of those who lied before me, if you are unlucky somebody who hasn't an interest in teaching you a lesson will bring you to the ground, and kill you, take all your stuff and leave you bleeding out, while you slowly realize, that even if incentives are tried to be kept down with story telling and myth building about public security, da police and justice system, it will just remain one thing, good night stories, so the sheep don't lose trust.

Always remember one thing, the only intelligent thing any communist has ever said, political (and economic) power only come from the barrel of a gun

There is actually a lot of deflationary pressure people don't realize.

In the past 100 years you've had:
1. proliferation of fractional reserve banking
2. massive increases in per worker productivity and workforce participation
3. massive increase in credit (99% of all money now is credit)

All of these things are baked into modern fiat's value, but all have hit the wall which has given central banks a lot of room to print money without seeing a lot of inflation. The problem with low interest rates is that it creates asset bubbles / volitility and causes income inequality. But it prevents or at least delays the incredibly large credit crunch that would have otherwise happened.

Why am I not allowed to issue negative bonds?
Those central bank fuckers can have a -10% bond all the time.

>we do not live in clown world

>>14234483
>deflationary pressur
>proliferation of fractional reserve banking
lol
>deflationary pressure
>increase of wroker productivity
on the paper do the wage stagnations over the last 50 years
>deflationary pressure
>massive increase in credit
wew lad, leave again and lurk, burn your econ books and cook some food, it is worth more

>>14234436
>It generates incentive to produce resources.
Out of?
At which point do resources come into being, and how is this caused by inflation?
Resources come into being through a correct (key word) evaluation that an object is of higher value than previously thought relative to other objects
Which factor of production gets more correctly estimated with respect to its utility when we confuse people's perception of measuring the actual financial worth of those very objects?

Your expansion is just a mass confusion project, a well-disguised venture in mass decentralized 'public works', and the results are the same. People mobilize to economic activity and misallocate resources, causing a worse life for everyone down the line and deluding them in the present that they're engaging in activity which leads to growth. It'd be more honest to get the government to incur debt in order to fund the digging and filling in of holes.

>>14234483
How exactly do fractional reserve banking and increases in credit decrease the money supply

>>14233737
>They were not the bad guys
They were as bad as everyone else.

>>14234650
>They were as bad as everyone else.
Great argument Moshe

>>14234436
The largest problem with your family of schools of economics is that you consider all things outside of the monetary nexus as not properly belonging to the economy.

Even if your contractions and expansions cause long-term growth, these cannot come as a result of causing people to more correctly evaluate resources. It can only come as a result of tricking people into liquidating resources which exist "outside of the economy" (leisure, family time, self-improvement, true goals, etc.) in order to, on false foundations of ignorance, work more. This is not a good thing, and you shouldn't advocate for it.

>>14234551
You forget that people's perception is already confused in a recession. People overvalue and undervalue things all the time in cycle, this is obvious.
The job of the FED is to time it right, to correct it. That's the rub. But if the Fed does nothing you get situations like the 30s.

>>14234717
see >>14234724
We very much do take it into account. People deceive themselves, even without intervention.

>>14234717
the most hilarious about this is, with reducing everything outside the monetary ponzi to unimportant, they kill the economy. Somebody who just slaves can't buy anything that is being produced. The Monetarists and Keynesians ignorantly ignored the lesson Manderville tried to teach. Fuck compared to monetarists and keynesians, communists are economic geniuses

>>14225897
On the long term: they don't. What the boomers are doing here is just robbing the zoomers blind. And zoomers are too stupid to let it happen.

>>14234724
The FED very much did do something during the 30s, though. It allowed its massive monetary expansion to collapse and contract upon itself, and even manually contracted on top of that.
It's entirely disingenuous to blame the 1930s recession on the market. The 1920s was the period of most active state-monetary-bank economic involvement ever recorded on the history of the planet, and the 1930s were entirely plagued by price fixing, public works and other phony get-out-of-jail-free policies which do nothing but make the issue worse.

>People's perception is already confused in a recession.
People's perception is always to a degree confused, yet a recession is the result of noticing this confusion, not a result of continued confusion. A recession is nothing but the liquidation of faulty investments. The state's oversight and economic tweaking is not necessary, nor remotely helpful, in this circumstance. The idea that putting the price of EVERYTHING up (or down) will alleviate people's confusion is nonsense.
The monetary economy is perhaps one of the most complex things to ever exist. The confusion lies in differing degrees to every resource therein. Blanket increases and decreases of perception will not help.
In fact, one of the largest contributors to this systematic misjudgement is the active use of monetary policy.

You speak about incentive. Analyse the incentives of giving people the power to control the money supply in a democratic system. The state is not above economic analysis and the rational self-seeking behavior of those within it.

If this were solely down to misunderstanding on an individual level, each recession would liquidate those with a lack of understanding and place money in the hands of those who know how to navigate booms and busts - and, like any product, those who knew how to navigate funds in booms and busts would grow economically.

>>14234737
Think about the workings of what I said; how resources come into being and how the economy can be made to grow without actually improving people's ability to estimate resources. You're talking over and above what I'm saying without quite grasping the the concepts which I am employing, so the conversation becomes useless. You just end up reiterating.

>>14234532
>>14234582

I think you missed the point. All those things happened over the last 100 years and caused huge inflation, but that inflation has already happened. Those things are no longer happening or stopped increasing, so you no longer have them increasing inflation.

>>14234913
Then your second point is a bit odd sandwiched between one and three: increase worker productivity causes deflation, while one and three cause inflation.
The monetary supply is still shooting up too, and, while not as quick as prior, its not like the monetary velocity has stopped increasing. This happens a lot through internal bank mechanisms and efficiencies, the internet, contactless, cultural movements away from physical pseudo-money, etc.

Back in the good old days of post WW2, workers could ask for higher wages which caused natural good inflation. It was literally best of times.

Also if any of you feel even bit like mellonited, neck yourselves.

>>14235002
Asking for higher wages doesn't cause inflation, it just moves money from entrepreneurs to workers.

>>14234851
>>14234912
I did not talk over it. Capital investment in means of production grows WITH consumption increase. It's not an either/or, they complement each other (though not simultaneously).
You seem to think a market can fix itself. Then explain the flaw in the idea that a gold standard, or indeed bitcoin (a deflating currency) would incentivize people to hold currency rather than invest it?

>>14235113

Higher wages leads naturally to price hikes

>>14234582

If individuals/corporations ever start paying down debt faster than they take on new debt 1. and 3. will hard flip to deflationary - both individuals and corporations are already in massive debt, in an honest system eventually the credit cycle would push deflation.

Tptb will do whatever it takes to try to stop this and will cause a hyperinflation as a result.

>>14226437

>Step 1: Give out free loans
>Step 2: Trigger deflationary crisis
>Step 3: Borrowers assets get liquidated

I, for one, am looking forward to buying a Europoor castle with 100 acres for $100K in a few years.

>>14225897
Cause the economy already crashed, but it have to be maintained artificially, money have to flow to maintain growth the time to prepare well for the programmed "economical crash".

Liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate. It will purge the rottenness out of the system. High costs of living and high living will come down. People will work harder, live a more moral life. Values will be adjusted, and enterprising people will pick up the wrecks from less competent people.

>>14229362
>>14230750
The original example posted was correct. There wasn't really a need for clarification.

A better way to have shown a clarification would have been converting the EUR/USD rate to its equivalent USD/EUR rate.

1/1.1180 = 0.8945 USD/EUR

Then calculating the forward exchange rate, using the assumed interest rates.

0.8945 * (0.975 / 1.05) = 0.8306 USD/EUR

Then converting all USD/EUR rates back into EUR/USD rates.

1/0.8945 = 1.1180 and 1/0.8306 = 1.2040.

Therefore, the drop in USD/EUR, due to higher US interest rates, is the same as a rise in EUR/USD, due to lower European interest rates.