September 17, 2012
They also create all sorts of economic distortions.
UPDATE: Alec Rawls emails:
Don’t think that zero is as low as interest rates can go: money as a store of value is also threatened.
Primitive man often faced an interest rate of -%50 per hour, if he caught some meat for instance, and was trying to get it into the bellies of his family it spoiled or was snatched by competitors. Now you can store your income and wealth in financial instruments and only buy meat when you want to eat it, or keep it in the fridge or freezer for even greater convenience. We take all this for granted, but as near-zero nominal interest rates come to be paired with rising inflation–an outcome that is pretty much guaranteed under QE3–even coin and currency will no longer keep stored value from wasting away. We are heading into difficulties that should be a thing of the past, and its not just bedbugs and resistant disease. Government is squandering EVERYTHING.
I think this is why guns and ammo are selling so well.