JPMorgan CEO Jamie Dimon warns the world isn't ready for 7% interest rate

Ya, the whole article read as: Investors are addicted to cheap money.
Of course banks and investors want lower interest rates, that's how they make money. When rates are higher, fewer people take on debt, which means less money for the banks. And investors have higher borrowing costs, so they make less money. Sadly, this also sucks for the average person, as our credit is also more expensive. However, we can take a look over at Turkiye for the counter-factual plan. Erdogan was nice enough to run an economic experiment for the world on what happens when you cut interests rates during inflation. The result of that experiment has been rather insane inflation.. But hey, it got him re-elected. So, that was nice (for him).

Ultimately, higher interest rates are kinda needed and probably here for a while.

Bank profits inflate the money supply.

If banks hold 100% of the money and lend it all out x10 (fractional reserve) and earn 1% interest, the money supply is growing by 10% per year.

That's inflation. All that money goes to the banks.

Edit: that's 1% on top of whatever they have to pay for the money from the fed, so 7% rate plus 1%, or whatever.

That doesn't even account for the stock market and other speculative devices.

When business and the wealthy class get richer, they want to get even RICHER. Prices rise. Which drives record profit, which makes rich people wealthier, which causes the cycle to repeat.

Raising interest rates is SUPPOSED to make people uncomfortable and stop spending. It's not working yet, because literally EVERY INCENTIVE IN OUR SOCIETY is pushing people to spend spend spend.

There is no functional market force driving down housing costs, food costs, or education costs. Unchecked capitalism can't work.

We just need proper incentive structures and regulation. But seeing as nobody has the guts to start figuring that out, the only lever we have is interest rates.

So they'll keep going up until something breaks.

Theyre raising rates because it is a way to limit the amount of money entering the system. Low rates have been feeding investers that have been driving up housing prices among other things. And the rate of inflation hasnt slowed down as much as it needs to. That suggests the amount of money the market requires is still significantly lower than the amount being added to the system.

I'm not sure what the other person's talking about.

It's really simple. Companies borrow money to do projects that they can't currently afford. When interest rates are low, you can start a lot more projects. When interest rates are high... those projects have more risk and need more immediate returns before your interest payments start hurting your profits.

It's kind of like 0% APR in the consumer world, "why buy later when I can buy now for basically free."

Of course, all that money companies use to start projects doesn't immediately create the business to do the work ... so the businesses doing that work previously can charge more, and the price to get them to do any work increases. That last part is the inflation...

So... if you raise the interest rates, you kill the purchase orders, which lowers demand, and then lowers prices.

That's also why raising rates too much is a scary prospect, because you can literally stall out the economy because instead of too many companies trying to start projects too few companies are starting projects and people start getting laid off because there's not enough work to go around.

It's a way to slow down money machine go burrrrr.

He's a crook for sure but high interest rates really hurt the working class. Their mortgage payments go up etc...