Rates: When Zero Is Way Too High
I believe the article is mistaken on a lot of things but, they are correct about increasing credit expansion in order to prevent the onset of recession. In fact, the rate has to increase exponentially. However, that can't happen indefinitely. A deep recession cannot be avoided, only postponed and exacerbated.The Theoretical Explanation of the Process of Stagflation (according to Austrian school economics - Mises, Hayek, Rothbard, etc): I believe we have experienced A, are now experiencing B, and are heading into C. Meaning we are trying to indefinitely postpone the consequences of the previous boom with an even larger and ever accelerating monetary boom. In fact, the last boom was the postponement of the 'dot-com' bust. This doesn't hinge on nominal percentage rates of interest though, there are multitudes of ways to initiate credit expansion. BTW, these are the six microeconomic reversion effects (apply it to the housing market during the boom):1. The rise in the price of the original means of production.2. The subsequent rise in the price of consumer goods.3. The substantial relative increase in the accounting profits of the companies from the stages closest to final consumption.4. The "Ricardo Effect." (inflation pushing down the real value of wages, causing an incentive to use labor instead of capital goods and intermediate products)5. The increase in the loan rate of interest. Rates even exceed pre credit-expansion levels.6. The appearance of accounting losses in companies operating in the stages relatively more distant from consumption: the inevitable advent of the crisis.