Nov 20 2024 54 mins 1
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For this month's CHATS segment, financial historian Edward Chancellor leads us on a captivating exploration into the evolution of interest rates, showcasing their pivotal role from ancient civilizations to the capitalist era. Chancellor uncovers how the disdain for usury transformed into a tool for economic development. Hear how iconic figures like John Maynard Keynes have shaped modern economic policies with their advocacy for low interest rates and why Chancellor believes the balance of interest rates is crucial for guiding economic behavior.
We also journey through history to understand the impact of low interest rates on financial stability, drawing parallels from John Law's 18th-century France to today's financial crises. Chancellor dissects how artificially low rates have historically spurred speculative bubbles and risky financial behavior, leading to economic turmoil. By reflecting on events like the global financial crisis and the Latin American debt bubble, we unravel how low interest rates incentivize yield chasing and can misalign with growth, becoming a catalyst for instability.
As we navigate the implications of prolonged low interest rates today, we scrutinize the resilience of financial markets despite central banks' interest rate hikes. Chancellor sheds light on the unexpected optimism in the investment landscape, fueled by AI innovations and government interventions. We delve into the intricacies of central banks' policies, questioning the effectiveness of inflation targets and considering how technological advancements could naturally lead to deflation. This episode is an enlightening journey through the complexities of interest rates and their profound impact on economic landscapes throughout history.
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The information contained in this podcast does not constitute financial or investment advice. Please consult your own financial advisor for information concerning your specific situation.
