The Full Case Against Ultra Low and Negative Interest Rates


The Institute for New Economic Thinking has the article The Full Case Against Ultra Low and Negative Interest Rates.

There are several reasons why unprecedentedly low interest rates will probably not stimulate demand and may even threaten financial stability

We don’t pay enough attention to the lesson Keynes taught. When demand is insufficient, pumping money into the system is not effective. The paradox of saving is no paradox at all. We know why it happens, and we should have learned by now that fiscal policy is the only way out. If the private sector can’t put people back to work, the government has to do it.

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