From: Billy Brown (bbrown@conemsco.com)
Date: Tue Apr 20 1999 - 12:00:41 MDT
Ron Kean wrote:
> Interest rates are set by supply and demand. If almost everyone were
> trying to lend substantial amounts, and almost no one creditworthy was
> willing to borrow similar amounts, real interest rates for sound loans
> would be extraordinarily low compared to what we are used to.
> Likewise for return on capital invested in stocks.
Well, yes, but remember there are two sides to that supply/demand equation.
A huge supply of money looking for investments is only a problem if there
aren't enough profitable investment possibilities. Or, to put it another
way, if 90% of the population retires but the other 10% can profitably
invest all of their money, then real rates of return will not collapse.
The real question, then, is what will the supply of investment opportunities
look like relative to the supply of investment capital. I believe Robin
Hanson has looked into these issues a bit. Are there any comments from our
resident economist?
Billy Brown, MCSE+I
bbrown@conemsco.com
This archive was generated by hypermail 2.1.5 : Fri Nov 01 2002 - 15:03:35 MST