After Decades of Cheap Money, Something Big Changed

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@business 9 ай бұрын

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@DK-qf6pr 11 ай бұрын

I would like more time spent on graphs rather than random clips from the 60s and 70s

@delphipascal 11 ай бұрын

Borrowing costs are higher than they have been but they're not what can historically be called high

@judyl.7811 11 ай бұрын

1:10 fundamentl forces shape where the price of money settles. 2:10 FED sets the borrowing costs well below the natural rate with money too cheap, there would be too much investment and not enough saving. overheating economy and rising inflation. 2:30 the economy would be cool, causing unemployment. the natural rates help balance the maximum employment 3:00 it was around 5% for 10-year bonds 3:15 capture the main drivers: 4:00 it invested in US government bonds or IOUs 5:20 long-term interest rates could settle somewhere between 4.5 - 5 % 5:55 if AI and other technologies live up to the hype 6:10 all of these forces combined 7:55 cheap credit to expensive one

@Andrzejszulc12 11 ай бұрын

A perfect educational material. Simplified but not oversmplified. Short but not too short, and the conclusion is very clear.

@DK-qf6pr 11 ай бұрын

All those random clips from 70s made it more complicated than just showing graphs

@PoisonelleMisty4311 11 ай бұрын

There are several reasons why high borrowing costs are likely to remain in place for the foreseeable future: Central bank policies: Central banks play a crucial role in determining interest rates. In response to economic conditions, central banks may choose to keep rates low or increase them. In recent years, many central banks have kept rates low in an attempt to stimulate economic growth following the global financial crisis. However, as the global economy recovers and inflation picks up, central banks may start to raise interest rates to control inflation. Higher interest rates lead to increased borrowing costs for businesses and individuals. Government debt levels: Many governments around the world have accumulated high levels of debt in response to fiscal stimulus measures. High levels of government debt tend to push up borrowing costs as investors demand higher returns for the perceived increased risk. As governments continue to grapple with high debt levels, borrowing costs are likely to remain elevated. Market volatility: Uncertainty and volatility in financial markets can lead to higher borrowing costs. Investors become more risk-averse during periods of market turmoil and may demand higher interest rates to compensate for the perceived higher risk. Factors such as geopolitical tensions, trade disputes, or economic recessions can contribute to market volatility and higher borrowing costs. Inflation expectations: Inflation erodes the purchasing power of money over time. If individuals and businesses expect higher inflation in the future, they may demand higher interest rates to protect against the erosion of returns. Central banks may also raise interest rates to curb inflationary pressures. As inflation expectations rise, borrowing costs are likely to increase. Increased regulation: Since the global financial crisis, regulators around the world have introduced stricter lending standards and regulations to prevent another crisis. While these measures aim to enhance financial stability, they can also lead to higher borrowing costs for businesses and individuals. Increased compliance costs and capital requirements for lenders can translate into higher interest rates for borrowers.

@findingsuccess6457 11 ай бұрын

Yes, but you forgot to add the wages to the equation. Wages have not matched inflation and people are forced to use more borrowing power while forcing a shrinkage in savings. There is more credit card and student loan debt than ever before.

@narikhamster1343 11 ай бұрын

While inequity is a cause for concern for the coming years, this video's topic is not on wages.

@findingsuccess6457 11 ай бұрын

@narikhamster1343 well it should be. Wages directly affects America's spending habits and lead to inflation/deflation periods and events. This also affects the velocity of money which can lead to stagflation. If wages were to out pace inflation the spending would increase the demand for debt would dropped and therefore dew to the law of supply and demand, debt would be cheaper by far.

@pradanal.m.r.8276 11 ай бұрын

The video is not talking about wages... it will need seperated video to discuss that matter... Just so you know that real wages is not a simple thing to discuss, especially with deteriorating of USA infrastructure and the significantly low manufacturer cost in China... USA is already becoming not competitive in global trade, and wages is surely complicate the matter

@findingsuccess6457 11 ай бұрын

@pradanal.m.r.8276 I don't agree...just the simple statement of "wages have been out paced by inflation for x numbers of years has added to the growth of debt" would have been fine. There was no mention of wages reflecting the use of debt anywhere in the video.

@natasfresas 11 ай бұрын

Wow, the animation was superb. Great job Bloomberg and Crisscross

@loki112000 11 ай бұрын

It amazes me that we fabricated a system to help bartering and we've managed to make it so complex that no one can fully undestand it. We are brilliant fools

@justdamilare 11 ай бұрын

The animation is awesomeeeee

@cbk666 11 ай бұрын

The music is too loud

@noelgriffin3369 11 ай бұрын

BEAUTIFULLY DONE!! top marks for the team that produced this...more more more, this is Bloomberg for the next generation

@razkrog5151 9 ай бұрын

Outstanding visuals, writing, and edit. Bravo, guys. One of the best so far.

@djayjp 11 ай бұрын

Not true. Interest rates will be going down massively this year and next. AI is also extremely deflationary.

@Metacognition88 11 ай бұрын

Thanks Bloomberg, this was a highly nutritious and juicy video.

@meher_pratap 11 ай бұрын

Beautifully produced and presented ❤

@robertmiller2173 11 ай бұрын

Excellent, short, to the point, factual and well presented I Give you an A!

@darwinadvincula4758 11 ай бұрын

This is so well done 🔥🔥

@devon9075 11 ай бұрын

Since when was accelerating technological development and increased productivity inflationary? We have alwasy heard that those are deflationary forces. Great choice of music for the video btw - I loved the audio track playing with this.

@leggocrewtv2052 9 ай бұрын

Loving this: hope the next generation checks this out!! spreading the word!

@EnronnSierra 9 ай бұрын

Living within my means, not falling for that money pit trap called buying a home, living with room mates to keep costs down, cook your own food instead of going out most of the time, wear the same clothes for years, even with holes in it. My luxuries are Internet, Deodorant, Toothpaste, bath soap and detergent. Two can play at this game.

@RahimBah1 11 ай бұрын

Insightful analysis on borrowing costs! This video delves into the reasons behind the persistence of high borrowing costs, offering valuable perspectives for investors and financial enthusiasts. #EconomicInsights

@boomsuga 11 ай бұрын

Very good eight and a quarter minutes of content

@toshi-ki6016 10 ай бұрын

As simple as Demand & Supply, but in a complex interactive economic ecosystem.

@vhol93 11 ай бұрын

too loud music compared to voice, hard to hear :( :( :( :(

@02nupe 11 ай бұрын

I heard just fine

@danwickramasinghe4744 10 ай бұрын

Very informative 😊

@davisoaresalves5179 11 ай бұрын

Very good vídeo.

@thereisnospace 11 ай бұрын

what bout the hoarding super wealthy, lowering wages?

@har8397 11 ай бұрын

Lol which baby boomers prepared to retire between ages of 35 and 45??? WS traders???

@PoisonelleMisty4311 11 ай бұрын

Overall, a combination of factors such as central bank policies, government debt levels, market volatility, inflation expectations, and increased regulation contribute to the persistence of high borrowing costs. While these factors may fluctuate over time, it is likely that borrowing costs will remain elevated in the long term.

@J1MKAKA1N 11 ай бұрын

Loved the visuals

@aJxxw 11 ай бұрын

Animation is beautiful

@thereisnospace 11 ай бұрын

of course no word on the super rich getting richer and the economic balance getting out of whack. the super rich are a big problem.

@Rupeshkumar-qy7hf 11 ай бұрын

would love to see the same analysis for Europe/Eurozone!!!!

@jordiecash 11 ай бұрын

Same as US but slower and worse in every way hahaha

@Rupeshkumar-qy7hf 11 ай бұрын

@@jordiecash Major economies had stopped buying US debt (tbills), so i beg to differ. That's why the situation of Europe becomes complex and interesting at the same time.

@jasonhaven7170 11 ай бұрын

Aging demographics and xenophobia will ruin Europe. The UK will remain strong because British youth are pro-immigration while European youth are anti-immigration. @@Rupeshkumar-qy7hf

@ssuwandi3240 10 ай бұрын

Emerging markets are the next driver of growth due to dollar and Euro stagnation

@limxin0014 11 ай бұрын

such educational videos need to be a weekly series!

@willrose5424 11 ай бұрын

Brainwashing videos🤨

@har8397 11 ай бұрын

What do you think will happen the next time there's a crisis?? Rates will go near 0. Everyone knows this

@semmu93 11 ай бұрын

this video is way overanimated for this topic, it makes it harder to focus on the actual content

@afroxyzz 8 ай бұрын

The wealthy also create jobs. They don't owe you anything

@Piresearchgroup 11 ай бұрын

This is the best content Bloomberg has ever created. 🤗

@hardlife507 11 ай бұрын

"Borrowing costs are back to the NORM"

@LazyTram911 11 ай бұрын

Very very stylish!) ❤❤❤

@aitor517tube 11 ай бұрын

Is there a written article too? Could someone find the link?

@mlisb0n 11 ай бұрын

It’s funny how countries like Angola always had high interest rates (more than 30%). And we are still not used to it

@Ahoto_papa_bi 11 ай бұрын

Angola has 30% interest rate because some years they can get inflation of 100%…..30% is even low in a place where you can have 40% inflation within one month just by governments bad decisions

@rohanindra6401 11 ай бұрын

I read a book from Peter Zeihan about how interest rates will be higher due to demographics as well as the breakdown of global trade due to insecure trade routes. Both he said would create a breakdown of the economy. Many thought he was alarmist then but is being proven right by this video as well as Houthi Red Sea attacks which prove his thesis on the vulnerability of global trade.

@treesaremadeofwood2145 11 ай бұрын

Given the battle for the 9 lines with the Chinese trade route yeah that would be right, hence the whole Taiwan issue, if China gets Taiwan then they get the 9 lines complete and control one of the most important areas of sea travel for goods and cargo giving China a massive grasp over global trade movement along with how much of the global debt they have bought.

@YoY664 11 ай бұрын

Zeihan has been talking about demographics since the mid 2010s. People were too arrogant and stupid to acknowledge it then.

@jolness1 11 ай бұрын

What’s the song in the background of the section starting at 42s? I dig it.

@pratikdagu 11 ай бұрын

Great explanation!

@sciencemonster 11 ай бұрын

Jeez....annoying and LOUD background music. Not worth the effort.

@dreamagino6800 11 ай бұрын

Model was kind of kept silent. Could be more transparent

@alexward3256 10 ай бұрын

Too optimistic forecast, i think

@jfhucka1 11 ай бұрын

Incorrect though. This would totally be true if the money supply was fixed or constant. But it is not, the reason the fed drove interest rates up is because of inflation. We had inflation because we had too much money chasing too few productive places to put that money. The video is saying that money is going to get a lot more productive. If that is true then the fed will increase the money supply to meet that demand.

@BigHenFor 11 ай бұрын

Not really. Money isn't more productive if it's not put into value added activities, right? How much value does asset bubbles have to society as a whole? Not a lot, if one measures value by the distribution of wealth across the income distribution. Only a increasingly smaller amount of people are directly or indirectly benefitting from focusing on asset accumulation. Distribution matters too. And that's a dangerous tendency to pursue. Neoliberalism favoured assets over income. Consequently, we have economic, political, and social fragility increasing across developed nations who bought into the Neoliberal framework. So, the cost of money will have to go up, and the debt farming under Financial Globalisation will have shrink, or there will be a price to pay in social cohesion and political upheaval. The People want the expectations they have been given by society and markets to be fulfilled, and they are increasing disgruntled with economic apartheid and precarity. The idea thst more money printing is the way to go is insanity. Rather, it is time to deflate markets where zombie firms can exist without being productive, and to inhibit Stockholder Primacy with its accompanying executive share price manipulation, and return to a more orthodox financial system. The perverse motivations that are puffing up asset bubbles, and starving the truly productive economy have to removed. The free ride given to capital has created externalities that could permanently put life on this planet at risk. It's a time to stop and think.