When “Cash Becomes King” . . . .

[farming101]

I'm not arguing that imprudent investors should be bailed out. Far from it. But when you have central banks intervening in the credit markets to push the rate of interest to zero, then investors have no choice but to assume risks that they would never be able to assume in a free credit market. If they don't assume the risks, their competitors will and put them out of business. So malinvestments, instead of being a rarity in a market economy in which risk is not deliberately masked by central bank policy, pile up during the boom phase. In the bust phase that we are now entering, the carnage will be immense.

In a higher interest rate environment, do you feel that investors would be more content just to sit on their money rather than invest in ventures that carry more risk?

Nothing ventured, nothing gained is a very old proverb.

[AlbertaFarmer5]

In a higher interest rate environment, do you feel that investors would be more content just to sit on their money rather than invest in ventures that carry more risk?

Nothing ventured, nothing gained is a very old proverb.

Not trying to tell you anything you don't already know. But interest rates do not move in isolation. All other investment opportunities also adjust. Any investor will look at the potential return, with the cost of interest included. The absolute value of the interest is irrelevant, it is the cost of the interest relative to the risk/reward that matters. I could pay 100% interest for a 200% annual ROI. But can't pay 0% interest on a negative ROI.

[farming101]

That's true. If interest rate was all important it would be smart to have money in a bank in Argentina.