World is rich because low rates but how long ?

[Dogedegen]

Rates are not low. Thats the thing. Fed is at 3.5-3.75 and three members just voted to raise again. Therefore, I am not sure where this "low rates" framing comes from exactly.

Yeah that is one of the first things I questioned in this thread that it is based on a misunderstanding of rates. If you look at it in a weird and relative way to really bad countries then we could say that the rates in the west are low, but this is the wrong way to look about it. Rates have been low a decade ago, but now they have been quite high for a number of years. Users which have not worked with loans to fund a business or projects do not understand well how expensive the current rates are, the world went from almost free money to very expensive money in a few years.

I am glad you brought up the stablecoin thing. The GENIUS Act actually prohibits issuers from paying you interest in the present moment. So the yields you are seeing? These are channeled via tokenized Treasury products. You are lending to a government sitting on $40 trillion in debt spending a trillion per year just on interest payments alone. Does that seem solid to you?

You are right to question it, but the questioning is not fully complete. Solid compared to what? We are not talking about Bitcoin versus yield farming on stablecoins, we are talking about yield on stablecoins versus other things that could give you a yield. If you look at the crypto space, then Tether is probably the most solid and best way to get any kind of yield. One can get much higher rates of return with some protocol staking or some DeFi lending but the risks with that is very high compared to Tether. Often the liquidity dries up, the underlying tokens or coins lose a lot of their value or the platform gets hacked and then it is all over. Compared to that Tether is quite a solid pick, but compared to the world we could open this question.

World isn't rich even with the low rates, since the world has been facing higher inflation than usual, expect the rates to be going up very soon, the united state is forecasted to have 25bps increase in rate very soon, basing on that, we may only have 1 year before we are seeing a higher rate, if inflation is still high, the rate will be raised again.

We don't have low rates right now so this statement is not appropriate, it actually does not make sense at all because you are talking about low rates and higher inflation in the same sentence. If inflation is high then rates are going to be high too, which is what we have right now.

[PERtua]

I believe the crucial difference is between asset values and the true wealth of a people. Low rates can cause people to gravitate to stocks. Property and other riskier investments, making balance sheets appear much stronger than they are. But not necessarily more productive. The first sign of a repricing of assets, not a disappearance, may be in sight if rates remain elevated. That adjustment is much easier on businesses with real cash flow than on businesses that are financed on cheap debt. So, perhaps the more important question is not How long will the rates stay low? but rather, How much of today's valuations will withstand the absence of cheap money?

[Peanutswar]

You see world go dubai monaco miami london switzerland you see people spend a lot money expensive cars designer clothes many of them invested on risky assets gold btc and stock market.
We see people who is not even geniuses they took advanche of situation the low rates we all member 2021 covid times a lot money was printed.
[...]

Apparently not all of the countries right there have the same like what you have mentioned if you tried to compare here in my country Philippines most of the people taxes are just go through the funds of the government and not for the establishments to build for the community necessities also when it comes to a salary is most of them are into a higher rate even into a per hour rates, compared to my country we are just paying per day imagine the 1 hour salary of a person there is equivalent to a whole week of salary from my country. We are just earning roughly 10-20 USD per day.. not per hour. Reason why most of the things here are expensive, expensive to live.