Negative interest rates spreading around the world are a result of globalization and technology, a unique combination in history, resulting in powerful deflationary effects.
But, rather than the deflationary effects being all bad, not only are many good because of increased productivity, but even many of the bad like reduced income in nations or localities with inefficient economies, can improve efficiencies by investing in things like education, healthcare, technology and infrastructure.
This is a unique time in history in that because of low or negative interest rates, such investments are a no brainer for wise economies.
As for misappropriation of capital, that is possible whatever interest rates are. The US housing bubble behind the 2008 crash was mostly due too poor lending standards and lax regulation on complex new securities and derivatives. Now, Denmark is mitigating a housing bubble by restricting foreign money into Danish housing and other restrictions/regulations.
The resultant large income inequality is an opportunity to redistribute some of the wealth for investments mentioned above, including increasing minimum wages or earned income tax credits. This even helps the wealthy long term.
No comments:
Post a Comment