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Why is everything going to shit? (feddit.de)

submitted 1 year ago by [email protected] to c/[email protected]

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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???

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[–] [email protected] 5 points 1 year ago

Too many reasons to list so I’ll add another

Stocks are only ever allowed to go up, if they go down you risk death

Covid caused massive increase in some stocks, now those companies need to find new ways to create revenue from the base they had prior to Covid to out match the base they had during it

Some companies had drop in stocks during Covid, they need to make it up to their shareholders so they don’t lose confidence