Zero interest limit doctrine

The doctrine that a central bank has become powerless once it has lowered the interest rate to zero. – This assertion has been clearly refuted empirically. This is because the interest rate is not the only channel through which monetary policy affects the economy. In the course of the financial crisis that followed the subprime crisis, central banks used quantitative easing to inject targeted liquidity into the interbank market, which had dried up almost completely, despite the zero interest rate, thus fundamentally supporting banks’ ability to lend. Another question, of course, is where the banks’ loans went; in the crisis states of the EMU, unfortunately, least of all to improve competitiveness. – The demand derived from the false zero interest rate doctrine – even put forward by the International Monetary Fund in the spring of 2010 to the utter horror of national economists and central bankers – that central banks should allow a higher inflation rate in order to achieve a wider margin in interest rate policy is ill-considered. Price stability, namely the preservation of the measure property of money, is an important public good, not least for social cohesion. – See expropriation, cold, fragmentation, monetary stability, negative interest rate, repression, financial.

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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/