Interest and Bitcoin - Impossible?

[GCInc.]

So, saving to buy a car is less productive than going into debt for that car?

It certainly is. Spending as soon as possible opens up the need and opportunity for more production than would saving for years before spending. That's what we as consumers have been told for decades, and considering the advances made within that time, it's true.

... yet look at the price of it; the miserable condition the western economies are in. Yes, spending by debt obviously does not work when done excessively. Maybe it is possible to craft a system to encourage spending with no or with controllable debt (discard compound interest, anyone?).

[myrkul]

So, saving to buy a car is less productive than going into debt for that car?

It certainly is. Spending as soon as possible opens up the need and opportunity for more production than would saving for years before spending. That's what we as consumers have been told for decades, and considering the advances made within that time, it's true.

Saving is deferred consumption, yes. But how do you get the funds to save, hmm? You produce more than you consume.

[GCInc.]

Saving is deferred consumption, yes. But how do you get the funds to save, hmm? You produce more than you consume.

Consumption implies wastefulness, which we need to minimize. There are numerous vectors of value dynamics in between black-white saving-consumption.

Ideally, in a demurrage system "spending" from the spender's viewpoint would mean investment into more stable assets, like nybble41 said. Not consumption.

There's also a significant difference between debt and idle money [from work already done]. All debt systems are like playing with fire, someone will fail future production eventually even in the perfect setup of all good intentions. Maybe we should just focus on exchanging value already produced. And as importantly minimize idle value, subject to corrosion.

[myrkul]

Saving is deferred consumption, yes. But how do you get the funds to save, hmm? You produce more than you consume.

Consumption implies wastefulness, which we need to minimize. There are numerous vectors of value dynamics in between black-white saving-consumption.

Ideally, in a demurrage system "spending" from the spender's viewpoint would mean investment into more stable assets, like nybble41 said. Not consumption.

So, in an ideal world, people will only buy real estate and other strong long-term investments, and rather than eating, live off love?

There's also a significant difference between debt and idle money [from work already done]. All debt systems are like playing with fire, someone will fail future production eventually even in the perfect setup of all good intentions. Maybe we should just focus on exchanging value already produced. And as importantly minimize idle value, subject to corrosion.

That's an interesting idea. How do you suggest we build an economy with neither savings nor debt?

[GCInc.]

So, in an ideal world, people will only buy real estate and other strong long-term investments, and rather than eating, live off love?

Come on, I didn't say all spending. It's useful to not think black and white, either-or.

How do you suggest we build an economy with neither savings nor debt?

I haven't gone that far in my plans, but if you ask then I would say that in principle by just doing. Savings or debt do not build anything. Productive activity does.

Again, moderation is the key to stable progress. We cannot have utopia all at once (!) A lot of compromises are required.

[myrkul]

So, in an ideal world, people will only buy real estate and other strong long-term investments, and rather than eating, live off love?

Come on, I didn't say all spending. It's useful to not think black and white, either-or.

Consumption is a vital economic activity. Not just eating, but cars, household goods, anything that either loses value over time, or is consumed by use. People need these things, and you can't just eliminate it, or even really discourage it very much without hurting the economy. Now, certainly we shouldn't encourage oerconsumption, which is what inflation does, by making less durable goods better investments than just holding on to your money. Demurrage would do the same thing, but to a lesser degree because of it's relative stability and predictability. Certainly it would discourage saving, since that's it's intended purpose.

How do you suggest we build an economy with neither savings nor debt?

I haven't gone that far in my plans, but if you ask then I would say that in principle by just doing. Savings or debt do not build anything. Productive activity does.

Sure, but how do you propose I buy a car with productive activity?

[Impaler]

Time preference and the general "risk-free" rate of interest are just the aggregate effects of these sorts of opportunity-cost considerations being made by all the holders of currency in the market. Most of the time the ROI is more subjective than the fixed 5% return in the example, but it is no less real for that. No one is taking advantage of anyone else; lending at interest is nothing more or less than redistributing ready capital and future income to where they are each most valuable, which is fundamentally the basis for any economic activity.

Your arguing that interest derives from Productivity of capital goods, so you and myrkul need to have a debate on what the true source is interest is because your presenting an incompatible argument to his.  I find your productivity argument weak because the Return on Investment of capital goods can and dose become negative when their is an excess of capitol, something that frequently occurs when entrepreneurs pile on to a profitable sector of the economy and saturate it.  Eventually enough unprofitable businesses go bankrupt to restore the returns to at least a break-even level.

With sufficient competition the return on all capital goods should fall to zero and stay their, to what ever degree that ROI is above zero must derive from something that prevents it from dropping.  And that is clearly money interest, once the capitol ROI is driven down too or below that of money then lending for additional business expansion in that sector stops.  Thus the rate of money interest acts as a 'floor' to ROI of capitol goods.  Your explanation is thus backwards, money interest creates capitol ROI not the other way around.

[GCInc.]

making less durable goods better investments than just holding on to your money.

Yes, what's wrong with less durable goods as long as they're based on sustainability of the whole (which they currently aren't)?

Sure, but how do you propose I buy a car with productive activity?

You're right in that practically no value can be exchanged instantaneously. A medium of exchange, and necessarily storage of value is required. However, usually as soon as you store the value, it starts to erode (not talking only about money, but anything, because of entropy).

When you transfer value, its erosion is mitigated and - because of the dynamics and novelty (another basic property of life) that the value encounters instead of stagnation - it may be implicitly replenished (causing lessening of entropy within the system).

When applying this to your example of buying a car, maybe the excess value you produce daily / monthly that you intend to use to buy the car, should go to the car dealer immediately. Forward part-payments. You can be compensated in the total price for doing that. I don't know, just off my mind.

[myrkul]

making less durable goods better investments than just holding on to your money.

Yes, what's wrong with less durable goods as long as they're based on sustainability of the whole (which they currently aren't)?

Well, that's just the problem. Inflation and demurrage both encourage buying cheaper, disposable items, rather than saving up for one that will last longer. They encourage needless consumption.

Sure, but how do you propose I buy a car with productive activity?

You're right in that practically no value can be exchanged instantaneously. A medium of exchange, and necessarily storage of value is required. However, usually as soon as you store the value, it starts to erode (not talking only about money, but anything, because of entropy).

Then why do some things appreciate in value over time? Why is a bottle of wine that is 50 years old more valuable than one that is 5?

When you transfer value, its erosion is mitigated and - because of the dynamics and novelty (another basic property of life) that the value encounters instead of stagnation - it may be implicitly replenished (causing lessening of entropy within the system).

When applying this to your example of buying a car, maybe the excess value you produce daily / monthly that you intend to use to buy the car, should go to the car dealer immediately. Forward part-payments. You can be compensated in the total price for doing that. I don't know, just off my mind.

That is the car dealership acting as a bank, and managing your savings for you. Try again. How can I make a large purchase without saving or going into debt?

[GCInc.]

Inflation and demurrage both encourage buying cheaper, disposable items, rather than saving up for one that will last longer. They encourage needless consumption.

I agree. Maybe there are ways to combat needless consumption and preserve the benefits of quick value transfer. No I can not tell what those would be.

That is the car dealership acting as a bank, and managing your savings for you.

No, in such a system the dealer would need to forward the value himself ASAP. The value would be in perpetual motion and no party would manage it for a length of time.

Try again. How can I make a large purchase without saving or going into debt?

Barter? Which implies "saving" in a way that has already enabled progress of value, like mentioned previously.

I don't see another logical way. Making forward part-payments means turning the whole chain of future value upside down so that the car dealer owes you his production of the car, I can't quite twist my head through where that would lead.

[nybble41]

Consumption implies wastefulness, which we need to minimize. ... Ideally, in a demurrage system "spending" from the spender's viewpoint would mean investment into more stable assets, like nybble41 said. Not consumption.

I would like to take the opportunity to distance myself from this line of reasoning. Investment is not inherently better than consumption, or vice-versa. The sole point of investment, however, is to enable future consumption. Consumption is not waste; it is the whole point of economic activity. There is nothing noble about a currency designed to force its users to abandon it in favor of something more stable; that is just one of the reasons why such a currency will not become widely adopted (at least not voluntarily).

So, saving to buy a car is less productive than going into debt for that car?

It certainly is. Spending as soon as possible opens up the need and opportunity for more production than would saving for years before spending.

Saving to buy a car is neither more nor less productive than going into debt for that car. In order for you to go into debt, someone else had to save so that they would have the excess resources necessary to make that loan. This is true even if the only two entities involved are you and the maker of the car. Either your savings (loaned to the maker) or the maker's savings are what allow the maker to survive while working on the car rather than gathering necessities. Regardless of whether you saved up for the car, someone had to, so in the broader economic perspective there is no difference.

BTW, introducing a third party (a bank) who makes a "loan" without any actual saving doesn't change that fundamental equation; without the saved surplus, the bank can issue as much money as it wants, but there won't be anything to buy with it. Money has no value without savings.

... the Return on Investment of capital goods can and dose become negative when their is an excess of capitol, something that frequently occurs when entrepreneurs pile on to a profitable sector of the economy and saturate it.

Yes, and interest can and does become negative in real terms when there is an excess of capital. You see this when the economy is undergoing inflation--people accept below-inflation levels of interest because there is nothing better available to invest in.

With sufficient competition the return on all capital goods should fall to zero and stay their, to what ever degree that ROI is above zero must derive from something that prevents it from dropping. And that is clearly money interest, once the capitol ROI is driven down too or below that of money then lending for additional business expansion in that sector stops.  Thus the rate of money interest acts as a 'floor' to ROI of capitol goods.  Your explanation is thus backwards, money interest creates capitol ROI not the other way around.

If capital goods were superabundant then their marginal ROI would indeed be zero. I assume that was what you meant by "sufficient competition", but it's not a realistic scenario. Capital is scarce, not superabundant. The interest rate reflects the ROI on capital throughout the economy; if the ROI in a given sector falls below the interest rate, that is a signal that there is enough investment in that sector, so in that sense it does act as a "floor" for a particular sector. If the ROI were to fall across all sectors, however, then so would the interest rate "floor". If there was no expectation of return on investment then the interest rate would be zero (or even negative, given inflation), because no one would be interested in taking out loans.

[Impaler]

So, in an ideal world, people will only buy real estate and other strong long-term investments, and rather than eating, live off love?

Come on, I didn't say all spending. It's useful to not think black and white, either-or.

Consumption is a vital economic activity. Not just eating, but cars, household goods, anything that either loses value over time, or is consumed by use. People need these things, and you can't just eliminate it, or even really discourage it very much without hurting the economy. Now, certainly we shouldn't encourage oerconsumption, which is what inflation does, by making less durable goods better investments than just holding on to your money. Demurrage would do the same thing, but to a lesser degree because of it's relative stability and predictability. Certainly it would discourage saving, since that's it's intended purpose.

You consistently confuse consumption with investment and in a most biased way.  For you every time something is 'saved' its an investment, and every time something is 'consumed' it's a wasteful act of gluttony and immediate gratification.  But every act of investment IS an act of consumption, something which raises aggregate consumption may be doing it by raising investment, it may even be redirection funds from non-investment consumption (the proverbial hookers and blow) towards productive investments.

I've explained that demurrage corrects and diminishes the incentive for immediate gratification by correcting future valuations.  Under demurrage it is investment that is encouraged, not consumption for immediate gratification.  This has been demonstrated in the few instances ware demurrage has been implemented the populous significantly increased investment activity.

Here is a rather fanciful example of how future valuation under interest is actually causing the kind of waste you seem to abhor.  Say I have a Goose that lays a golden eggs and that it will do so in perpetuity.  Lets say the Golden Eggs are worth $1000 per year and interest rates are 5%.  The Goose is worth $20,000 according to a Net Present Value calculations which is simply per year value divided by interest rates (1000/0.05).  If eating the Goose had a value of >$20,000 dollars then the rational choice is to eat it.

Now as you can see the interest rate as denominator means that lowering interest rates makes the goose more valuable, if interest is brought to zero the goose would actually become theoretically infinite in value, which yes is absurd but a perpetual anything is already an absurd fiction so we should not be surprised that an infinite revenue steam has infinite value.  Rather it's the opposite that should surprise us, that infinite revenue streams have paltry finite values because of interest.

Now lets try a more realistic scenario, growing a tree for lumber.  Trees have finite time to maturity say 100 years and will sell for $1000 dollars.  If have to expend $100 dollars to do the planting after which the tree goes on it's own.  This is thus a good example to demonstrate how interest effect a long time horizon investment activity because it should be fairly obvious that this action IS a productive investment (for your grandchild benefit perhaps), just a slow one and while it certainly wouldn't be the first thing worthy of funding it can't be called a wasteful act.

Under 5% interest this investment returns $-92 dollars, yes it's actually a massive loss you would have been better off putting the money in a bank and just collecting interest (or spend it on the aforementioned hookers and blow).  Why is it so bad?  It's because the $1000 dollar payoff in 100 years is savagely reduced by compound interest to a mere $7 dollars.  Meanwhile your upfront cost is in the present and is not reduced so profit is 100 - 7 = -92.  In fact this investment needs an interest rate less then about 2.5% to just breakeven.  Under 0% interest the profit is a cool $900 dollars as our future value isn't being diminished and someone is actually likely to do it as their is a $9 per year return.

[myrkul]

That is the car dealership acting as a bank, and managing your savings for you.

No, in such a system the dealer would need to forward the value himself ASAP. The value would be in perpetual motion and no party would manage it for a length of time.

He is "managing" that savings by moving it along so that it does not lose value. Yet, he still keeps track of how much you have paid in, and when the payments equal the value of the car, you get the saved value, which he has been holding for you, in the form of a car.

see: https://en.wikipedia.org/wiki/Layaway

Try again. How can I make a large purchase without saving or going into debt?

Barter? Which implies "saving" in a way that has already enabled progress of value, like mentioned previously.

I don't see another logical way.

Simple. You don't. You can not make a large purchase without either saving, or going into debt.

You consistently confuse consumption with investment and in a most biased way.  For you every time something is 'saved' its an investment, and every time something is 'consumed' it's a wasteful act of gluttony and immediate gratification. 

I make no such value judgments. In fact, quite the opposite:

Consumption is a vital economic activity. Not just eating, but cars, household goods, anything that either loses value over time, or is consumed by use. People need these things, and you can't just eliminate it, or even really discourage it very much without hurting the economy.

At least read the things you quote.

EDIT: You may want to check your math, 100-7 is 93, not -92. (and who the hell charges interest on trees, anyhow?)

[Impaler]

making less durable goods better investments than just holding on to your money.

Yes, what's wrong with less durable goods as long as they're based on sustainability of the whole (which they currently aren't)?

Well, that's just the problem. Inflation and demurrage both encourage buying cheaper, disposable items, rather than saving up for one that will last longer. They encourage needless consumption.

Mathematically disprovable, it is fact exactly the opposite from what you propose, interest causes short-term thinking and consumption of disposables.  
Again I'll do a Net present Value calculation using a Hypothetical 'Consumer Joe' who is faced with the choice of buying a cheap disposable product repeatedly or a durable one.  Let's say they can both provide the same utility and the durable version will cost $50 dollars upfront and last 10 years.  The disposable version will cost $6 per year.  Without interest the cost of the durable good simply amortizes out to $5 per year and is thus more cost effective then the disposable.  But under 5% interest future costs are also reduced and a $6 expenditure per year over 10 years actually has Net Present Value or -$46.33 (I complex bit of math that I used this tool for http://www.investopedia.com/calculator/netpresentvalue.aspx) making it cheaper by around $7 over the duration to buy and use disposable products rather then the durable one.

These net present value calculations are all very standard business math that any business person knows and they in no way created by me or demurrage advocates.  They simply show your understanding was completely backwards, the detrimental effects you disdain are actually caused BY interest and the system you purport to endorse.  You have a significant test of your intellectual integrity, do you admit your error and renounce belief that interest is good?

[nybble41]

Rather it's the opposite that should surprise us, that infinite revenue streams have paltry finite values because of interest.

This isn't really surprising at all, if you understand time preference, which obviously you do not. The revenue stream is only infinite if you defer consumption forever, and no mortal being can rationally be willing to wait forever. Eventually you and everyone you have ever cared about will be dead, and beyond caring about any further revenues. Any production past that point might as well not exist.

Consider this: under what circumstances would eating the goose be valued more highly than twenty years worth of golden eggs? Starvation, perhaps? Would it really makes sense to preserve an unending supply of golden eggs at the expense of starving in the present?

Put as simply as I can manage, you aren't qualified to tell anyone how much they should value future goods relative to present goods, any more than you are qualified to dictate any other form of economic preference to others, and yet that is exactly what you are trying to do with demurrage. You yourself act in a manner which is consistent with having a positive time preference--since you haven't starved yet, you clearly do not always choose to defer consumption--and yet you fail to perceive or understand this unchangeable fact of mortal existence and call it "irrational".

... it should be fairly obvious that this action IS a productive investment (for your grandchild benefit perhaps), just a slow one and while it certainly wouldn't be the first thing worthy of funding it can't be called a wasteful act.

And yet, it is a wasteful act, precisely because it isn't the first thing worthy of funding. You are diverting present resources from high-ROI investments to a low-ROI investment. This is wasteful.

Why is it so bad?  It's because the $1000 dollar payoff in 100 years is savagely reduced by compound interest to a mere $7 dollars.

Compound interest doesn't reduce your return in the slightest. It just means that there was a better alternative. Put another way, you could have put $7 in the bank at 5% interest (i.e. into other investments earning 5% annual ROI, as opposed to the tree at a mere 2.3%), and gotten the same $1000 in 100 years for your grandchild, and still had $93 left over in the present to spend or invest as you choose.

[btcbug]

http://en.wikipedia.org/wiki/Economic_rent

Are you guys even aware that 'economic rent' means a price in excess of the fair market value that a asset holder extracts because of of holding a monopoly position?  Yes I deny the right to collect rent for anything, only a competitive market produces fair values.  The layman term 'rent' is used to describe any usage fee without regard to it's fairness.

Hotel rooms and capital goods are degraded by usage, the 'rent' we pay for these things just reflects a breaking up of their total usable life-spans into smaller chunks and selling those in chunks to different people, competition brings the rent on these things down to parity with the cost to make them.

Money when your done renting it is identical to what was lent out, the lender has lost nothing so you can not claim he has sold anything but the time-value of money.  This can not be equated with the rent on a real asset which asset which will eventually decay away, money is immortal.  If you rent someones physical assets you can never give it back as it was and rents are thus justified. 

But money is a social construct, a mere accounting tool of exchange, if I borrow the number Pi from you I don't consume it, degrade it, or makes it less able to calculate the circumference of a circle.  So why should anyone be paid a time based usage fee on something that can't be used up?  The only reason is if the lender is simply exploiting a monopolistic position by withholding money from its intended purpose of circulation and wont release the hostage without a ransom.

We pay "rent" or usage fee on hotel room partly to cover the owners costs associated with the deterioration, but part of the hotel fee is also to give the owners a profit. You didn't mention this and it almost seems like you're against profits in general the way you throw around the term "fairness" several times in one post.

Also, how is a lender exploiting a "monopolistic" position? Having savings is monopolistic now? This is almost too ridiculous to take seriously.

Money is a just a representation of goods and services that is much more practical for trading. Why do you think the intended purpose of money is strictly to circulate? Think of money as Apples or something less abstract.  Would I not have a choice to hoard some of my Apple crop to get me through a long hard Winter? Why is it "unfair" for me to accept something like 15% more Apples next season to lend mine out now, when I may in fact need them? This is a risk to myself and my family in several ways and interest MIGHT be an acceptable way to compensate me for it.

[kjj]

We should perhaps let Impaler respond, but I feel compelled to comment on this;

you must be punished with a currency that loses value over time, so that you can be encouraged to be as wasteful as everyone else.

I guess that could be put more nicely. The bottom line there likely is not to promote wastefulness, but progress, growth, evolution and all the good stuff.

The idea of accelerating progress through enhancing flow of value is starting to reveal upon me. Saving is stagnation. In nature, saving achieves little as compared to swift exchange of value. Keeping things stationary - whether material or immaterial - is subject to heavy corrosion. In all things, time eventually eats your value through entropy if you don't use it.

As long as a human monetary system obeys the laws of nature, the same would apply there. It's not difficult to imagine how keeping money off circulation (saving) does discourage initiative and achievement => increasing entropy (= what we generally consider the opposite of "good").

When you save, you aren't holding wealth stagnant, you are deferring your claim on that wealth, aka money.

By letting the rest of the world use the wealth that you own (by way of your claim on that wealth, aka your money) until you want to use it, you should be rewarded, not punished.  When you come along later to claim your wealth, the natural progress of technology should have made the things you want somewhat cheaper for the world to produce for you.

Demurrage perverts that process in exactly the same way that inflation does.  Under inflation, the money you hold is worth less wealth when you want to spend it, then when you save it.  Under dumurrage, the money in your pocket literally evaporates, so that you have less of it to redeem when you want to.

Both systems are theft, plain and simple.  The difference is that under demurrage, you may have a hard time figuring out who stole your wealth, while under inflation, everyone already knows.

[justusranvier]

Both systems are theft, plain and simple.  The difference is that under demurrage, you may have a hard time figuring out who stole your wealth, while under inflation, everyone already knows.

Naturally would-be thieves prefer the arrangement which provides them with the most job security. Now that the masses are catching on to the inflation game it's time for a new strategy.

[myrkul]

You know, impaler, increasingly I get the impression that you are conflating interest with inflation, specifically with credit expansion.

[Impaler]

This isn't really surprising at all, if you understand time preference, which obviously you do not. The revenue stream is only infinite if you defer consumption forever, and no mortal being can rationally be willing to wait forever. Eventually you and everyone you have ever cared about will be dead, and beyond caring about any further revenues. Any production past that point might as well not exist.

Consider this: under what circumstances would eating the goose be valued more highly than twenty years worth of golden eggs? Starvation, perhaps? Would it really makes sense to preserve an unending supply of golden eggs at the expense of starving in the present?

I clearly specified the goose lays eggs in perpetuity, no deferring of consumption is required to enjoy the utility of the eggs which is measured at $1000 dollars a year.  The point about eating the goose is exactly to show that under interest we would be compelled to make choices that curtail future productivity, obvious being under duress such as starvation would compel us to make short-term choices, so interest forces us to act AS IF we were under duress at all times.

Put as simply as I can manage, you aren't qualified to tell anyone how much they should value future goods relative to present goods, any more than you are qualified to dictate any other form of economic preference to others, and yet that is exactly what you are trying to do with demurrage. You yourself act in a manner which is consistent with having a positive time preference--since you haven't starved yet, you clearly do not always choose to defer consumption--and yet you fail to perceive or understand this unchangeable fact of mortal existence and call it "irrational".

You seem to be stuck in this notion that without time-preference we would never act and this comes from our mortal nature and knowledge of that nature.  This ignores the marginal utility of consumption within a time period, we know that the first bit of consumption has the highest utility and the next bit is reduced, so hunger for example is an ongoing need that will arise anew every day even after a high levels of satisfaction the day before.  If I want to maximize my total utility over a finite time period with a finite supply of food I would amortize the consumption over the period to keep my total hunger to a minimum.  I would not need to have any preference for satisfying immediate hunger more then future hunger to do this, just a preference for satisfying hunger generally.  Any ongoing need that people have that relate to comfort or pleasure follow the same pattern, we defer present consumption only if it offers the promise of maximizing total utility over time.

Furthermore I can refute that knowledge of mortality and finite time-horizons give rise to a preference for immediate gratification, exactly the opposite is the pattern we see in real human behavior.  Individuals unaware of their mortality consistently show the greatest desire for immediate gratification such as little children.  As people mature and become more aware of mortality their decision making consistently becomes more focused on the future as they make decisions to maximize utility over the finite remainder of their lives.

Compound interest doesn't reduce your return in the slightest. It just means that there was a better alternative. Put another way, you could have put $7 in the bank at 5% interest (i.e. into other investments earning 5% annual ROI, as opposed to the tree at a mere 2.3%), and gotten the same $1000 in 100 years for your grandchild, and still had $93 left over in the present to spend or invest as you choose.

Your making the classic Austrian error of assuming that high interest rates cause high productivity investment opportunities to just appear such that all investment flows into productive investments rather then diminishing the total investment activity.  This is patently absurd, interest rates simply cut off the lowest rung of productive investments, it dose not change the material productivity of any activity, only its profitability.  The tree investment indeed did have a 2.3% Internal rate of return but that rate dose not change based on the prevailing interest rate because internal rate of return calculus is explicitly to determine at what interest rate is a venture break-even.  The 5% returning investment still exists when interest is 0% and it still has a 5% internal rate of return, but with 0% interest its very attractive rather then just being barely breaking-even.

Entrepreneurs will always invest from best-to-worst.  The best investments with highest Internal rate of return get funded and then the slightly less savvy entrepreneurs take the next slice and the next and so on until people decide the remaining investment opportunists are unprofitable.  If the investment activity hits the floor created by interest rates it dose not bounce off and go back into the high return investments because they are already funded.  Would be investors simply cease to be investors and are left with no choice but to consume their capitol be it monetary or physical in a non investment activity or watch it decay before their eyes.