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Why is everything going to shit? (feddit.de)

submitted 1 year ago by [email protected] to c/[email protected]

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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???

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[–] [email protected] 1 points 1 year ago

Yeah. Raising the bar on how profitable a company has to be is the middle step here that connects raising interest rates to shittier stuff for us.

Before, in the era of free money, you just had to be good at looking shiny to stay afloat, and companies that didn't look shiny got left behind. Now you have to be actually functional.

We've arrived at the future we were borrowing from for the last 15 years.