The Importance of Negative Equity in the Economy

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The Reserve Bank of Australia has already announced that its equity has formally been wiped out. So either you get a situation where as far as I see it, the central banks just invert commerce, print money to operate with negative equity or the taxpayer must make good. The economy is entirely in the bubble economy, it's hooked on capital gains. And you can only produce those capital gains by ever losing monetary policy. It's not just enough to say, okay, we're not going to be as high as we would have been. We're going to have to have lower interest rates because you have to inflate the bubble.

On this episode, financial historian Edward Chancellor joins Nate to give a meta-history of interest rates and human societies. With recent news of global financial turmoil in response to rising interest rates, taking a look at our history could help us interpret our present and plan for the future. How deeply entangled is this financial predicament that we’ve gotten ourselves into? Can we learn from the past to reshape a more stable monetary policy in the future, or are inflating financial bubbles (and popping them) simply in our human nature?

About Edward Chancellor:

Edward Chancellor is a financial historian, journalist, and investment strategist. He is the author of Devil Take Hindmost: A History of Financial Speculation and his latest book, The Price of Time, where he explains the story of capitalism is really the story of interest: the price that individuals, companies and nations pay to borrow money. He is currently a columnist for Reuters Breakingviews and a contributor to the Wall Street Journal, MoneyWeek, the New York Review of Books and Financial Times.

For Show Notes and More visit: https://www.thegreatsimplification.com/episode/67-edward-chancellor

To watch this video episode on Youtube → https://youtu.be/q5PWaYw6h5k