[cowbolt]

My understanding is that increasing the interest rate causes capital to be more likely to seek low-risk guaranteed returns. The effect of this is to disincentivize investments and economic activity in general, as capital is more likely to be "parked" in risk-free debt, rather than seeking other ways of reaching high yield. The unintuitive aspect of it is how inflation could reach 2% when capital has a guaranteed, risk-free way of generating 5%+ yield. But I suppose that could be explained by examining the growing economic inequality of the past 30+ years.

[FreeHugs]

But the "high yield" investments are a zero-sum game. They don't create new money. If you invest in a company and the company is successful, your return is not printed. It comes from the pockets of the companies customers.

The risk-free returns on government bonds are risk free because the government never goes bankrupt. Because it simply prints the money it needs.

[naveen99]

When you start a company and a vc gives you a million dollars at a $10 million valuation, 1 million is real, the other 9 just got printed.

When you do labor, you print money. When you take out a loan and commit your future labor to paying interest, you are printing money (converting labor to money)