Through the Smoke

Interest rates are the price of money. Lowering interest rates is a direct transfer of wealth from savers to borrowers. There should be a floor to this. If people have bought into the concept of building Capital and delaying their consumption, plans can be scuppered by interest rates falling to silly levels. Especially if they stay at those silly levels. Pensioners and those invested in “safe” assets with predictable interest rates are hit hardest. Borrowers (who can prove they don’t need to borrow) can leverage up their ability to buy assets that do actually earn money (with money they get for almost free). I am a loud and persistent activist encouraging the building of Engines made of Capital. But what that Capital is doing matters. If that Capital is working for free, for someone else, and being eaten away by inflation, then something is rotten in the state of Denmark. We need to look through the smoke, mirrors, and ghosts and see what is actually being done, how well, and for who. Fundamental, Investing.