Money “should” cost something. Interest is the salary of money. A low interest rate environment is a way of artificially providing cheap labourers (cash to invest). It is the same as you get cheap labour in countries where there isn’t enough work (e.g., South Africa now), and have to force people to go to work with hut taxes when there is too much work and not enough labourers (e.g., South Africa during the Bhambatha rebellion of 1906, or Sierra Leone in the Hut Tax War of 1898). The flip side of cheap labour is that those getting paid struggle to survive (actual workers or Gran living off her pension). Cash is low pay work, so the labourer can decide when and where to work or sleep. A bond is lending your labourers for a higher fixed salary. Like getting your money a job. Equity/Stocks are slices of ownership in a real underlying business. Businesses are where the work gets done… with cash, borrowing, salaried workers and the resources from owners. No salary is paid for equity (dividends are the closest they come). If long term value is added, the capital will grow. If long term value is destroyed, the capital will shrink. There is lots of noise, smoke, and mirrors… but in the end, it’s what you do that matters.
No comments:
Post a Comment