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Record For Junk: Love The Low Interest Rates

Oct. 04, 2021 3:00 PM ET2 Comments
John M. Mason profile picture
John M. Mason


  • New records are being hit every day when it comes to the issuance of junk debt, and a lot of these funds are going to pay for higher dividends.
  • Now, however, we are facing a time when the low interest rates and the availability of money may be coming to an end which raises a lot of concerns.
  • But, acting in a way that will raise interest rates and reduce credit flows will disrupt markets that have been, almost continuously, supplied money to support economic growth.
  • The problem is that these efforts to stimulate the economy have resulted in numerous distortions in the financial markets that cannot be resolved by even more stimulus.
  • This is the dilemma that policy-makers and investors face when looking at where interest rates are going to go and what is going to happen to the stock market.

Hand shows a hologram percent .

Natali_Mis/iStock via Getty Images

Debt fills the United States economy. And, there is no indication of a slowdown.

Low interest rates, to many, are seen as a real blessing,

"U.S. companies have sold a record amount of junk-rated loans to

This article was written by

John M. Mason profile picture
John M. Mason writes on current monetary and financial events. He is the founder and CEO of New Finance, LLC. Dr. Mason has been President and CEO of two publicly traded financial institutions and the executive vice president and CFO of a third. He has also served as a special assistant to the secretary of the Department of Housing and Urban Development in Washington, D. C. and as a senior economist within the Federal Reserve System. He formerly was on the faculty of the Finance Department, Wharton School, the University of Pennsylvania and was a professor at Penn State University and taught in both the Management Division and the Engineering Division. Dr. Mason has served on the boards of venture capital funds and other private equity funds. He has worked with young entrepreneurs, especially within the urban environment, starting or running companies primarily connected with Information Technology.

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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Comments (2)

thumb.ai profile picture
Thanks especially for the links
StevenK1 profile picture
When we are done with this inflationary bout, and action is taken, it will be found out that owning equities or bonds was the wrong bucket.

Holding Cash was the correct non-obvious answer.
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