<instructions>Your goal is to analyze the following comment and estimate how highly it will be upvoted by the Hacker News community.</instructions><comment><author>bedhead</author><text>I&amp;#x27;ve argued this for years. Interest rates peaked at about the same time that wealth inequality began to diverge around 1980 or so. I don&amp;#x27;t think any of this is terribly complicated. Money is a commodity, and like all commodities, the price is set at the margin. Money also has diminishing marginal utility, so as you accumulate more of it, at some point it has less use.&lt;p&gt;Think about two people, one extremely wealthy, one middle class. The middle class guy making $75k probably has to spend all his money for consumption: food, rent, car, etc. There&amp;#x27;s little left over for saving or investing. In order for that guy to justify forgoing consumption and instead saving it, he requires a high interest rate, otherwise it&amp;#x27;s not worth it. But what about the guy worth $100 million? He can&amp;#x27;t spend it all on consumption, so he has to save a lot of it. Ah, but what&amp;#x27;s his opportunity cost? Zero. He has no choice, and the money he&amp;#x27;ll earn from interest won&amp;#x27;t even get spent anyway. So, two people, two &lt;i&gt;very&lt;/i&gt; different marginal costs.&lt;p&gt;The world is just one giant pool of capital. Over the last four decades, as capital has shifted from being more evenly spread out amongst people with high marginal costs to a smaller group of people with marginal costs of zero, interest rates keep falling...the majority of capital now resides amongst people who can&amp;#x27;t spend it all and are happy to earn any real rate of return.</text><parent_chain></parent_chain></comment><story><title>Inequality, Interest Rates, Aging, and the Role of Central Banks</title><url>https://theovershoot.co/p/inequality-interest-rates-aging-and</url></story>
<instructions>Your goal is to analyze the following comment and estimate how highly it will be upvoted by the Hacker News community.</instructions><comment><author>notanzaiiswear</author><text>I am not convinced the theories in that article are correct.&lt;p&gt;One example: &amp;quot;The ultra-rich need no encouragement to refrain from buying goods and services, so any increase in income concentration should put downward pressure on interest rates. Another way to look at it is that an increase in income concentration boosts the demand for financial assets, which should push up prices and push down yields.&amp;quot;&lt;p&gt;Why should income inequality do that? What matters would be people&amp;#x27;s spending power, which is not necessarily correlated with income inequality - everybody could get richer, only some people could get a lot more richer, and it would still be income inequality.&lt;p&gt;Also not sure how he calculates growth and demand. He argues there is less need to invest into the future because there are fewer young people. But don&amp;#x27;t older people have even more needs than younger people (their maintenance is more expensive, they need accessible housing, cars to drive them around and so on)?&lt;p&gt;In my country (Germany) apparently they expect the demand for housing to rise, even though they expect fewer people, because they think people will live in increasingly smaller households (so more households with fewer people per household).&lt;p&gt;Just some random examples.</text><parent_chain></parent_chain></comment><story><title>Inequality, Interest Rates, Aging, and the Role of Central Banks</title><url>https://theovershoot.co/p/inequality-interest-rates-aging-and</url></story>