Rates are crashing and fuel to the moon!
Discussion in 'Ask An Owner Operator' started by Kenworth6969, Mar 3, 2022.
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So while you said that truck/trailer prices are a function of supply/demand and cost to build, which I'm not arguing that you're wrong (I think you're right, makes sense to me), in theory though wouldn't raising the interest rates (in layman's terms, ending the "free money" that loans with interest rates way below the inflation level basically are) help to create less demand for trucks and trailers? Because John Doe starts thinking twice about taking a risk with higher interest rated loans?
Anybody feel free to answer, I'm genuinely curious.gentleroger Thanks this. -
You’re right, think of borrowed money, the loan, as a product, and the interest rate is the price. Increase the price, decrease demand.
Because they can’t ever just leave well enough alone, an economist would object to that paragraph because it refers to interest rates, not “real interest rates”. Real interest rates are the interest rates charged, minus inflation.
Because we are in an inflationary period of, say, 8%, an equipment loan of, say, 6% has a REAL interest rate of -2%. The borrower actually gets paid, in inflation corrected terms, to borrow money.
That phenomenon is one of the reasons inflation can be difficult to reign in: people correctly assume they can buy things today with borrowed money, and pay less today while paying the loan back with deflated dollars much later. That increases demand, further creating inflation.BeHereNow97, gentleroger, 77fib77 and 2 others Thank this. -
How's the Van freight been? All the heavy hitters on 2.0....
Diesel Dave, JoeyJunk, God prefers Diesels and 3 others Thank this. -
Soon there will only be shorthaul out of
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JoeyJunk, Dave_in_AZ, Midwest Trucker and 5 others Thank this. -
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Last edited: Jul 1, 2022
Brettj3876, JonJon78, 77fib77 and 2 others Thank this. -
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