Welcome to the Capital Note, a newsletter about business, finance, and economics. On the menu today: the dangerous illusion of cheap money, ...

BY DANIEL TENREIRO & ANDREW STUTTAFORD July 02, 2021 BY DANIEL TENREIRO & ANDREW STUTTAFORD July 02, 2021 When 'Cheap; Money Won't Be, What Then? Welcome to the Capital Note, a newsletter about business, finance, and economics. On the menu today: the dangerous illusion of cheap money, cutting dividends is not the answer, home prices and inflation, warning signs from the Skew index, and fungi play the markets. News and Views TANSTAAFL and Ultra-Low Interest Rates Ultra-low interest rates are an invitation to malinvestment, irresponsibility, and delusion (not mutually exclusive failings), especially when those rates are, even if only in part, the work of non-market actors. Quite a bit of the borrowing that is under way at the moment (and has been for a while) is going to end in disappointment and tears. Eventually it will also lead to a major crisis in the government's finances. Brian Riedl, writing in the Washington Post: The election of Joe Biden to the presidency has prompted liberal calls to set aside pesky budget deficit concerns and go deeper into debt to finance large new spending initiatives — well beyond short-term stimulus. Influential left-of-center experts such as the Harvard economists Lawrence Summers and Jason Furman ...   READ MORE

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