[cowbolt]

My understanding is that increasing the interest rate causes capital to be more likely to seek low-risk guaranteed returns. The effect of this is to disincentivize investments and economic activity in general, as capital is more likely to be "parked" in risk-free debt, rather than seeking other ways of reaching high yield. The unintuitive aspect of it is how inflation could reach 2% when capital has a guaranteed, risk-free way of generating 5%+ yield. But I suppose that could be explained by examining the growing economic inequality of the past 30+ years.

[FreeHugs]

But the "high yield" investments are a zero-sum game. They don't create new money. If you invest in a company and the company is successful, your return is not printed. It comes from the pockets of the companies customers.

The risk-free returns on government bonds are risk free because the government never goes bankrupt. Because it simply prints the money it needs.

[naveen99]

When you start a company and a vc gives you a million dollars at a $10 million valuation, 1 million is real, the other 9 just got printed.

When you do labor, you print money. When you take out a loan and commit your future labor to paying interest, you are printing money (converting labor to money)

[FreeHugs]

Not by the definition of money I am using when I refer to "the money supply" or the term "printing money".

I am referring to sum of money the FED has created.

[naveen99]

There is always two sides to money. The fed pays government workers, the other side is the worker’s labor. Fed buys bonds, the other side is the bond. Fed sells a bond, it destroys the money it receives back. fed buys gold, the other side is the gold. the other side is as much responsible for the money creation as the fed. Fed doesn’t unilaterally create money.