Was just trying to explain to someone why everything is going to shit, specifically companies, and realized, I don’t fully get it either.

I’ve got the following explanation. The sentences marked with “???” are were I’m lost. Anyone mind telling me, if they’re correct and if so, why?

The past few years, central banks were giving out interest rates of 0% or even negative percentages. Regular banks would not quite pass this on, but you could still loan money and give it back later with no real interest payments.

This lead to lots of people investing in companies. As long as those companies paid out more money than those low interest rates, it was worthwhile. But at the same time, this meant companies didn’t have to be profitable, because they could pay out investors from money that other investors gave them???

This has stopped being the case, as central banks are hiking interest rates again, to combat inflation???

  • jetAEnglish
    920·
    1 year ago

    Everything isn’t going to shit. The sky is still blue, food is growing, people have good lives.

    The current economic issues are cyclical in nature, due to our form of global capitalism, we have 7-10 year up swings and down swings.

    • DogMuffins@discuss.tchncs.deEnglish
      16·
      1 year ago

      I don’t think this is really true, and maybe it’s even a little naive.

      For example, 50 years ago earning a “living wage” was much more achievable.

      Also, issues we’re presently facing like war related sanctions, china’s instability, and climate change have never occurred before, so how can they be cyclical?

      • jetAEnglish
        42·
        1 year ago

        Depends on where you live. Many countries have been on an upswing for the last 10 years. Better access to resources health care technology. Net improvement for the human race.

        If you’re talking about an American perspective there was an upswing in 2010 to 2020.

    • qwertyWarlord@lemmy.world
      21·
      1 year ago

      I don’t know why you’re being downvoted, I was going to say the same thing. “Everything” is quite the exaggeration, most people are just fine without junk tech companies. Things are more expensive and they’ll probably keep getting more expensive because they’ve been out of balance for decades. Food, gas etc. should be more expensive, we’ve just been blessed with cheap labor and subsidies. Climate issues aside we’re all going to be just fine