When interest rates are low we have conditions for asset bubbles to develop, and they are developing at the moment. The ultimate asset bubble is gold.
Interpretation
Low interest rates can lead to inflated asset prices, with gold being a prime example of such a bubble.
This quote by George Soros highlights the relationship between low interest rates and the creation of asset bubbles in the market. Specifically, he points out that when interest rates are low, investors are more likely to inflate the prices of various assets, including commodities like gold, which can lead to unsustainable growth and eventual market corrections.
In practice
Discussing market trends during an economic seminar.
The securitisation of mortgages added a new dimension of systemic risk. Financial engineers claimed they were reducing risks through geographic diversification: in fact they were increasing them by creating an agency problem. The agents were more interested in maximising fee income than in protecting the interests of bondholders. That is the verity that was ignored by regulators and market participants alike.
The collapse of the global marketplace would be a traumatic event with unimaginable consequences. Yet I find it easier to imagine than the continuation of the present regime.
Regulating and taxing marijuana would simultaneously save taxpayers billions of dollars in enforcement and incarceration costs, while providing many billions of dollars in revenue annually.
We are the most powerful nation on earth. No external power, no terrorist organization can defeat us. But we can defeat ourselves by getting caught in a quagmire.
My foundations support people in the country who care about an open society. It's their work that I'm supporting. So it's not me doing it. But I can empower them. I can support them, and I can help them.
The criminalization of marijuana did not prevent marijuana from becoming the most widely used illegal substance in the United States and many other countries. But it did result in extensive costs and negative consequences.
If you owe your bank manager a thousand pounds, you are at his mercy. If you owe him a million pounds, he is at your mercy.
If nobody can sell mortgage-backed securities based on trillions of dollars of unpayable instruments, there's a lot less risk in the overall system.
The difference between tax avoidance and tax evasion is the thickness of a prison wall.
When somebody asserts that a stock has an earning power of so much, I am sure that the person who hears him doesn't know what he means, and there is a good chance that the man who uses it doesn't know what it means.
I have a saying: There are no brave old people in finance. Because if you're brave, you mostly get destroyed in your 30s and 40s. If you make it to your 50s and 60s and you're still prospering, you have a very good sense of how to avoid problems and when to be conservative or aggressive with your investments.
If you wait to see how much money you have left at the end of the month to put toward savings, the answer may be zero. So, set up an automated monthly transfer from your checking to savings account. Once you lock into that commitment, you'll be forced to scale back spending to make ends meet.
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