Was just trying to explain to someone why everything is going to shit, specifically companies, and realized, I don’t fully get it either.

I’ve got the following explanation. The sentences marked with “???” are were I’m lost. Anyone mind telling me, if they’re correct and if so, why?

The past few years, central banks were giving out interest rates of 0% or even negative percentages. Regular banks would not quite pass this on, but you could still loan money and give it back later with no real interest payments.

This lead to lots of people investing in companies. As long as those companies paid out more money than those low interest rates, it was worthwhile. But at the same time, this meant companies didn’t have to be profitable, because they could pay out investors from money that other investors gave them???

This has stopped being the case, as central banks are hiking interest rates again, to combat inflation???

  • IninewCrow@lemmy.caEnglish
    484·
    1 year ago

    It’s cyclical and it’s been happening for thousands of years. It’s part of our human nature.

    We all work together and build systems, societies and civilizations and do great things. We become wealthy and then slowly concentrate that wealth to smaller and smaller groups of people. Eventually the majority of the wealth is controlled by a very small group of people and everyone else has nothing. The system at this point can not sustain itself and collapses. Then the whole human system restarts again from the bottom.

    It’s happened many many times throughout human history.

    We are just at the height of one of those cycles.

    • OtakuAltair@lemm.eeEnglish
      8·
      1 year ago

      Maybe this can change in the software space with the advent of foss.

      It kinda is I suppose, even if very, very slowly.

    • CanadaPlus@lemmy.sdf.org
      42·
      1 year ago

      I think the overall picture is accurate, wealth typically concentrates in good times, and spreads out in bad ones. However, we in the West are still nowhere near the all-time highs of inequality, and while it’s cyclic it’s not in a predictable way like that. I don’t think it’s even clear that highly unequal societies must become unstable.

      • IninewCrow@lemmy.caEnglish
        41·
        1 year ago

        The trouble is that we can’t apply the same speed of development or collapse to our civilization as to those in the past.

        We have nuclear weapons, mass communications, global internet and interconnected multinational financial systems that all work at real time speed all across the world at the mass level and individual level.

        We are capable of developing in so many ways at such great speed compared to the past … but we are also capable to destroying ourselves instantly through nuclear warfare, or within a century through our ignorance of climate change.

        • CanadaPlus@lemmy.sdf.org
          1·
          1 year ago

          Yeah, technology is really different. Ideology is also new; agricultural civilisation had versions of feudalism for thousands of years until the American and French revolutions, and it seems like they’ve actually made a huge difference in how things go. It’s pretty much the sole reason I think we could break the cycle.

    • atticus88th@lemmy.world
      13·
      1 year ago

      Theres something about the human mind as we take more shits throughout the years everything starts to hear, look, smell, taste and feel more and more like shit as the time passes.

      Which perfectly explains why my greatnana who lived to be 100 thought it was absolutely hilarious that she shat herself when she tried to blow out her candles on her birthday cake.