The inevitable effect of contemporary central banking is serial financial booms and busts. With that comes increasing levels of systemic financial instability and a growing dissipation of real economic resources in misallocations and malinvestment. The world ultimately becomes poorer.
Why?
Because gains in real output and wealth depend upon efficient pricing of capital and savings. But the modus operandi of todays central banking is to deliberately distort and relentlessly falsify financial prices.
After all, the essence of zero percent interest rates (ZIRP) and negative interest rates (NIRP) is to drive interest rates below their natural market clearing levels to induc…
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