Drlee wrote:So John. Question. Suppose I could borrow a large sum of money for my consulting business utilizing these absurdly low interest rates. Why would I not want to do that and let investment and inflation repay the loan? (Assuming they remain in balance.)
From your mouth to God's ears. I repeat myself all to frequently when I assert that we ought not discount the propensity of Democrats to lose an election by alienating the fly-over states. That is what Biden is all about.
If I were Pelosi or the chairman of the DNC, I would take AOC and her cohort of newbies into the cloak room and have a come-to-Jesus meeting. I would tell them to STFU until after the election. I would tell them that the only time they can open their mouths is in support of the candidate's every talking point. I would take away the ability of the republicans to run against them as best I could. The fact of the matter is that Trump, et al, are going to run against AOC and her buddies and not whoever the democratic nominee is. And they absolutely should.
The question is a bit vague honestly. Are you the only worker? Are you trying to expand or what are you planning to do with this money? How large is the risk? What are the benefits? What is the co-efficient between them? Are there pending work that you can't do right now for some reason without this loan? How easily is the investment available in your field?
In a perfect world, there is no downsides to this besides the fact that if everybody did it at the same time and tried to become self-employed/business owner of some sort then 90% will fail simply because everyone can't be self-employed or a business owner. There is not enough consumption to make everyone a businessman. Also as i mentioned before, the modern system where this happens, how do you really show that you deserve the investment? You show great efficiency.
You are thinking of a situation where you take a loan -> expand -> grow revenue and costs -> you are succesfull?(Lets say you built the exactly same studio as you already had) The bank doesn't give a shit about that actually. Your business is not investors/banks asset but the stream of money is. What the bank/investors give a shit about is how efficient are you at staying alive and your overall ability to produce value. (Money stream to the bank and investors) If you are very efficient with low costs and high revenue on a smaller scale compared to larger costs with the same relative revenue just on a bigger scale then although the 2nd enterprise is riskier for investment if something happens. So it will be harder to get investment. In a sense it boils down to question of risk benefit of sorts for the investors/banks. The house is baggage for a bank, they do not want your house, they want their stream revenue. Example:
A) Enterprise with 800 000 in costs and 1 000 000 in revenue. They make 200 000 profit.
B) Enterprise with 4 500 000 in costs and 5 000 000 in revenue. They make 500 000 profit.
Excluding the enterprise size question(Add couple more 0s if it makes it simpler), Enterprise A is more safe to invest in to. It has higher margins. The chances of bankruptcy is lower. So assuming that both work in the same field, the first enterprise will be able to get investment easier. It kinda forces B to cut down on costs to stay competitive in investment regard. Theoretically it also makes no sense for enterprise B to expand in size anymore until they reach the same margins/efficiency as enterprise A because their credit/investment will be pricier. So long term Enterprise A will overtake B i guess.
That is how I look at it right now. Now in a situation that i proposed such situations will obviously also happen but it would be very hard to cut down on the costs or more specifically labour costs because everyone would be in the same boat. So instead of fucking the worker, they would need to find other ways to increase efficiency. Or will need to expand in size instead of increasing efficiency if they can't find any other solutions. Usually the simplest solution is to higher cheaper manpower or overwork it and not create new technology/processes/systems.