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.