Many people think that the low-interest regime of the last 13 years is "normal" and that we're going back to normal, but Oaktree Capital's Howard Marks disagrees.
The co-chairman and co-founder of the global asset management firm said while he "doesn't really believe in the ability to tell the future", it's "his feeling that the Fed isn't happy keeping interest rates at 0%. It does encourage inflation and makes it easier for borrowers."
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"One of the ways the Fed solves problems in the economy is by reducing interest rates. Well, if your interest rates are 0%, you can't reduce them!" he told BQ Prime's Niraj Shah on the show World View.
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"Zero interest rates tend to keep companies alive that shouldn't be alive. That's not good. One of the beauties of capitalism is that it is Darwinian."
Marks said most people in the finance community are optimistic by nature. Quoting Demosthenes, whom Charlie Munger also quotes, he said, "What a man wishes, he generally believes to be true."
"So there's a lot of wishful thinking and people are holding to optimism and believe we're going back to the way of the teens, which we're not."
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