If a central bank increases the money supply with the aim of stimulating investment in the capital stock (as was the case in the U.S.A. between 1987 and 2001), market participants with a low inducement to invest will invest the cheap money on the stock market or in the real estate market. This leads to speculative bubbles. – Carry trades also ensure that loans taken out domestically at low interest rates are invested in higher interest-bearing accounts abroad. Therefore, a “cheap money policy” on the part of the central bank is economically disadvantageous; and the central bank’s sole task should be to preserve the measure property of money. – See bubble, speculative, carry trades, three-year tender, money, cheap, money squeeze, housing bubble, money inflation, inflation, crisis, central bank-induced, Larghezza, negative interest rate, low interest rate policy, zero interest rate, quantitative easing, interest rate stimulus, interest rate differential, interest rate, kept low.
Attention: The financial encyclopedia is protected by copyright and may only be used for private purposes without express consent!
University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
Professor Dr. Eckehard Krah, Dipl.rer.pol.
E-mail address: info@ekrah.com
https://de.wikipedia.org/wiki/Gerhard_Ernst_Merk
https://www.jung-stilling-gesellschaft.de/merk/
https://www.gerhardmerk.de/
Passende Formel
Quantitätsgleichung des Geldes
Geldmenge, Umlaufgeschwindigkeit, Preisniveau und reale Produktion verbinden.
Variablen: M Geldmenge; V Umlaufgeschwindigkeit; P Preisniveau; Y reales Einkommen.
Anwendung: Für monetäre Analysen und langfristige Preisniveauzusammenhänge.