Like Tree12Likes

Interest rate sensitivity

Closed Thread
Page 2 of 2 FirstFirst 1 2
  1. #11
    Quote Originally Posted by freeier:
    Generally interest rate level and property price trend are negatively correlated.. so if you are needing to sell a property because rates are going up, you tend not to get a good price because of the high leverage on property in the market.

    My concern with OP traineeinvestor's view is, whether the current financial system will continue to hold or it will need some fundamental changes.. the Bretton Woods convention was turned off in 1970 by Richard Nixon, thereafter interest rate has always been used as a tool politically regardless of the actual cost of money/inflation... 2008 saw the largest hit to the system that has been built up with credit bubbles.. will this continue ? If it does, then obviously the stance is fine and you make by leveraging into assets.. but if it doesn't hold well then we will see some ridiculous interest rate circa what was seen in 1998 Asia financial crisis.. then would a new QE still work, when reserve currencies are being attack (instead of the developing currencies).
    All very valid concerns - which is one of the reasons I used "moderation" in my opening post.

    Historically, most resets have occurred when governments have run out of other peoples' money - they've basically indebted themselves to the point where they can't service the debt (let alone repay it).

    From the linked article:

    "A study of currency systems, published as an appendix in TheBig Reset, shows that over 550 different currencies have gone extinct in the last 320 years. Almost 30% of these disappearances were caused by hyperinflation. History is unlikely to repeat itself exactly. But the Nixon shock 50 years ago will not be the last."

    https://www.omfif.org/2021/08/are-we...onetary-reset/

  2. #12

    Join Date
    Nov 2005
    Location
    Cramped island
    Posts
    5,585

    The problem has been hanging there since the GFC 2008. The world is trying to see how much of debt a reserve currency can take on before it actually cracks.. Confidence seem to be going stronger and stronger (as seen by the high S&P index level, and low UST10y cost) so no reason to be too much of a doomsday view..

    I think nobody really know if this actually cracks, then how fast will things deteriorate.. is it like the famous: "Gradually, then suddenly.” ― Ernest Hemingway, or will there be a graceful degeneration.. With such high leverage factors in the market (property, stocks, bonds)... makes sense that the 'suddenly' will be really sudden.. but still, its nothing we have experienced before so can only wait and be audience...


  3. #13

    Join Date
    May 2021
    Posts
    1,733

    The thread has entered into Ray Dalio mode..