Post
Topic
Board Bitcoin Discussion
Re: THIS CRASH IS DIFFERENT than previous crashes... The FEDERAL RESERVE is why....
by
bitquad
on 22/06/2022, 10:35:55 UTC
Have to agree with the OP, regardless of how he "behaved" in this forum by defending someone or not, this is irrelevant.

The interest rates and the era of the big crash of Lehman Brothers, where some even UK banks collapsed (Northern Rock, Kaupthing Isle of Man and others) - during this time the investors, the hedge funds, the institutions - they got used to "cheap money" i.e. printing money endlessly, with 0 interest rates given.

Now times are changing, the rates are up, the costs of living are skyrocketing globally - hedge funds want the US dollar, as much as it represents so much debt, the US isn't going anywhere, it's here to stay for at least another century or half of it.

The dollar has value with this debt, the debt is being carried over many years and investors can get nice returns if they invest in government bonds (i.e. treasury bonds):

https://www.bloomberg.com/markets/rates-bonds/government-bonds/us

These are safe returns, and can be speculative (i.e. you don't only gain 3%, you also gain appreciation of the currency), nonetheless 2.8% in 1 year is quite nice, it sounds low for many but the era of "cheap money" is pretty over.

So investors prefer it this way, also the tensions in the world (Russia Ukraine and now Russia US) and other issues as well as fear all bring "flight to safety" - it could stop at some point, but right now it feels like a shift and not a process that wants to stop.
What's 2.8% when real inflation is probably close to 20%?