"Why do people borrow in such a risky environment?"Why do people borrow in such a risky environment?
At least here, it's become even harder to get a loan from a bank with even higher interest rate, so unless there are some special deals to institutional investors, borrowing money to buy even riskier assets does not make sense.
Even though almost nobody can get a loan here, inflation is at least 50%, even though government is saying it's just 5-6%.
If I had an extra million dollars, I would still buy same amount of bread and use same amount of oil on my car.
Also, can't think of any product that is in scarcity, I could buy a spaceship today if I had money. So, is it a lack of products or increase of desire that increases prices?
This could definitely be a reason, but why would it increase price of oil? or real-estate?
Because of FOMO... They see prices going up and they feel like they are going to miss out. They feel like everyone around them is buying and the prices are going up. It's "herd" mentality.
"If I had an extra million dollars, I would still buy same amount of bread and use same amount of oil on my car. Also, can't think of any product that is in scarcity, I could buy a spaceship today if I had money. So, is it a lack of products or increase of desire that increases prices?"
We must be living in two different world. We're experiencing a whole bunch of scarcities. I'm having a bad time getting parts and goods.
Last time I bought a bunk of building studs (294 pieces of 2"X4"X8'), I paid $3.13 each. Last week I had to pay $8.43 each. And I had two other sources that wanted $11 each. I can't get a lot of building materials that I need such as treated lumber. My current project is going to require piles of sheets of plywood. The idea of buy those stacks is scary.
I bought the last fridge and kitchen range that my appliance store has on hand. They don't when they will have more appliances. Everything is back ordered.
And that just a couple examples. What world are you living in?
This could definitely be a reason, but why would it increase price of oil? or real-estate?
We were oil independent and exporting it one year ago. Biden's policies are making us import again and causing a scarcities. As far as RE goes, people are moving out of the cities and into areas creating a pressure on those markets. The RE markets that they left have declining prices due to less demand.
It's all based upon that balance between supply, demand, and available money/resources.
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