Jun 10, 2020, 3:56:20 PM6/10/20
In the past hard workers who were not risk takers saved money over years and got guaranteed returns from the federal reserve which took care of them. There was an incentive to work hard and save. Risk takers especially entrepreneurs had to actually take a risk by paying the higher interest rates. Borrowing had a real cost to
It. Therefore ther was a sense of morality which worked both ways. Risk had a price, a cost to
It and only the truly successful risk takers succeeded. The ones who added real wealth by creating sustaining businesses. The financial sector was better protected because millions of middle class people who did not want to take risks saved their money and got quite good returns from the banks and govt bonds. Those who preferred taking a risk and investing in the stock market had that option but many who
Preferred the safety in CDS ( fixed deposits) in banks or in govt bonds had that option as well. Today with such low rates everyone is basically forced to invest in the stock market or other avenues like gold, real estate etc. and which by their very nature are susceptible to volatility.
On the other hand entrepreneurs today take no real financial risk. The cost of borrowing is so
Low that it is insignificant.
The end result is that the few who simply have ideas (even if they fail) create enough wealth in the hype since everyone is chasing the stock markets. The many who simply want to work hard have no safe avenue to put their savings and are forced to invest in the stock markets. The whole game is rigged so only the top players get the enormous benefits in stock deals and options etc. The vast majority get the crumbs and so the inequality of income gets even further away and increases even more.
If we go back to the days of higher interest rates we will once again get more stability in our financial system worldwide and we will
Also start to see more equality of income especially in the US.