0815user said:
MTZehvor said:
...uh...what?
The reason interest rates are low is because Western governments are lowering them with the intention of encouraging investments. Basic monetary policy; lower interest rates to make taking out loans seem like a preferable option. The hope is that potential entrepreneurs will use the money to start businesses, increasing the amount of economic activity and tax revenue.
As for everything else, the government would simply need to raise the money necessary to buy back bonds and then refrain from selling them as much in the future.
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if someone invests into stuff, another one has to buy the stuff to make the economy work. 2 sides of the same coin. but to encourage both you first need to limit the amount of money you can gain holding government bonds.
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Encouraging consumption isn't a problem at the moment, purchasing rates are relatively high across all developed Western countries. The supply side is the issue at the moment, and that's where the (perceived) need for increased monetary policy comes into play.
