> Incentivize speculation to seek higher returns (create bubbles) > Make it impossible to amass capital through savings > Allow sclerotic firms to stay alive > Limit the ability for new companies to rise to fill the place of the mismanaged firms > Increases inflation to "stabilize prices" under deflationary pressures, driving up costs of services that are not made cheaper by globalism
Always interesting to see the tension between this common critique, and critiques of “usury”, which are obviously completely incompatible. I can see the point of both but ultimately higher interest rates are the natural equilibrium of a state with a young population and high productivity growth. Long live the talmudic network!
The fundamental problem is neither interest rates too high nor interest rates too low. It's how interest rates are set.
Market interest rates aggregate information to reflect the expected time value of capital. It would be a good thing actually to have capital available at that price.
But that's not what we have in Western nations. We have interests rates manipulated by central banks in pursuit of political goals. (They would say "macroeconomic" goals. Same thing.) This is not a good thing.
So the critiques of both ZIRP and usury are wrong, but there's no paradox in that. Both critiques focus on symptoms of their respective bad policies, rather than reasoning about what capital and interest should be in the first place.
>>4180 I think you hit the nail on the head. The original post is mostly due to the fact that low interest rates are the typical (and most recent) manipulation that has put us into our current situation.
