On Quantitative Easing
Zero interest rates and even negative interest rates are indications that there’s something wrong with the capitalist system. I don’t know of anyone who can definitively analyze what’s going on.
The following article attempts some analysis, and if you read it you’ll see how unfathomable the whole situation is:
I suspect the system was heading toward depression in 2007–2008 and the governmental, monetary, and financial authorities decided to do whatever it takes — i.e., to implement policies that heretofore would have been considered radical — to prevent a repeat of the Great Depression.
After lowering interest rates to zero they found that they still had to do more. So “Quantitative Easing” was invented.
Unprecedented. Financially weird. Complex. Experimental. No one knows what the consequences will be.
Mike Shedlock says: “QE sponsors bubbles by artificially lowering interest rates, it’s free money to banks, it distorts money markets, and central banks have become addicted to it.”
So far (since 2009 and then after the COVID recession) it has “worked.” The economy did not fall into depression. Asset prices rose to high levels (and investors sure do love that).
But Shedlock suggests that it might not be sustainable.
And, if that’s true, what will they try next?
