
ECB cuts rates and restarts bond-buying - novaRom
https://www.ft.com/content/9b2c29c0-d53d-11e9-a0bd-ab8ec6435630
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novaRom
That process toward ever lower interest rates drives asset price inflation:

Stocks, houses, and land — everything becomes more expensive. Because the
lower the interest rate, the higher the present value of future payments and
thus the market prices of assets. The low interest rate policy facilitates a
spectacular inflation of prices in the asset markets; a gigantic speculation
bubble is pumped up.

This initially offers investors high returns. At the same time, however, the
future yield prospects worsen. This can be explained as follows: Zero interest
rates make investors bid up the prices of stocks and houses until the expected
future returns of these assets are close to the zero interest rate set by the
central bank. In the extreme case, when the central bank sets negative
interest rates, expected market yields can even fall below zero.

Once central bank policy has succeeded in pushing all returns to or below
zero, the free market economy is about to end. Without a positive return in
sight, saving and investing stops: Because acting man has a positive
originally interest rate, it does no longer pay off to save and invest. The
division of labor economics comes to a shrieking halt. Replacement and
expansion investments will no longer take place. Capital consumption begins,
and the modern economy falls back into a primitive subsistence economy!

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nabla9
Central banks around the world lower interest rates, because they want to
avoid deflation. Everywhere in the world it's acceptable to buy debt or lower
interest rate. Things that would get inflation truly going are not politically
possible.

Now would be the time to use new methods like helicopter money.

[https://en.wikipedia.org/wiki/Helicopter_money](https://en.wikipedia.org/wiki/Helicopter_money)

>A second set of policies, closer to the original description of helicopter
money, and more innovative in the context of monetary history, involves the
central bank making direct transfers to the private sector financed with base
money, without the direct involvement of fiscal authorities.[2][3] This has
also been called a citizens' dividend or a distribution of future seigniorage.

