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How Central Banks Are Waging War on Your Savings

May 21, 2014
6757Mark Thornton writes in today's Mises Daily: 
He sees the problem as insufficient aggregate demand. Wolf considers the pre-2007 unsustainable credit boom a temporary fix, rather than the cause of the crisis brought about by central banks. His argument is that low interest rates and quantitative easing policy has been an insufficient policy response. His preferred solution is some type of massive public works program financed by government deficits. However, he believes that governments will refuse to borrow in order to build “productive assets.” This is classic Keynesian logic: solve the problems of debt and monetary expansion by engaging in more debt and monetary expansion. With governments reluctant to expand spending further he concludes that we are stuck with the second-best solution of a cheap money policy consisting of ultra low interest rates and quantitative easing. Besides, he notes, the “cautious rentier no longer serves a useful purpose.”

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