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**doxinwasido** · 04-09-2007, 05:29 AM

Indeed. He also argues that low interest rates are bad because they lead to more development, and other absurd things.

what are you, retarted? i argue that too much capital can lead to difficulties in assessing which projects are more more likely to succeed/ are most useful because it creates artifically lower interest rates. when money is cheap, people (especially the government) invests it in the wrong places because they either a) believe that there will be more coming/ there is lots of it, so a failure now doesnt mean much or b) believe that since rates are low, all projects are profitable/ useful.

poor investment decisions eventually fail, leading to a) a loss of capital that could have been invested elswhere and b) all sorts of macroeconomic problems (in the most general form, there is an increase in the standard deviation of gdp growth) or result in a loss, which is the same as a).

04-09-2007, 05:29 AM	#16
doxinwasido Join Date Oct 2005 Posts 383 Senior Member	Indeed. He also argues that low interest rates are bad because they lead to more development, and other absurd things. what are you, retarted? i argue that too much capital can lead to difficulties in assessing which projects are more more likely to succeed/ are most useful because it creates artifically lower interest rates. when money is cheap, people (especially the government) invests it in the wrong places because they either a) believe that there will be more coming/ there is lots of it, so a failure now doesnt mean much or b) believe that since rates are low, all projects are profitable/ useful. poor investment decisions eventually fail, leading to a) a loss of capital that could have been invested elswhere and b) all sorts of macroeconomic problems (in the most general form, there is an increase in the standard deviation of gdp growth) or result in a loss, which is the same as a).
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