Comment by blakesterz | Hacker News Reader

Comment by blakesterz | Hacker News Reader

  "Most of the private credit loans were floating rate and tied to the federal funds rate, which has persisted at a high level over the past three years. Fitch pointed to this as a catalyst for last year's defaults."

I wanted to dismiss that and say ... but it's not really historically high. I suppose it really is not IF you look WAY back. It actually has persisted at a relatively high level if you look back to 2009, which is more than a short time now.

I guess it is fair to say the federal funds rate has persisted at a high level over the past three years now isn't it?

https://www.macrotrends.net/2015/fed-funds-rate-historical-c...

Also interesting to note, "Fitch recorded NO defaults in the software sector last year. The rating agency noted it categorizes software issuers into their main target market sectors when applicable."

The problem of the current situation is that even 5% is considered as a high interest for many people, if not most of them. Inflation already pushes up the base price, and if the interest rate keeps on 5% and above many people simply won't consume, which will further pull down the economy.

For example, we decided to keep our vehicle for another 4-5 years instead of buying a new one. The same Hyundai vehicle of the same model, but different year (2026 v.s. 2020), has gone up 8,000 CAD (10K CAD considering tax), with a much higher rate (5.99% v.s. 0%). There is no way I'm buying another car in the foreseeable future. We can definitely afford it, but we won't.

The whole world has pushed up prices of food, housing and pretty much everything higher. This is the real problem -- although I wouldn't say it is the root problem.

> but it's not really historically high

i dont think the inflationary seventies and eighties are great lodestar

low interest rates are historically a sign of a stable polity and economy. so if anything, we want the conditions for prolonged low interest rates, rather than prolonged high interest rate.

Reply on news.ycombinator.com