View: Eurozone negative rate policy fails to get private sector borrowing
Eurozone negative rate policy fails to get private sector borrowing
The Eurozone central bank nominal negative rate experiment started in June 2014 but is getting panned by the private sector. Supply side lending is not producing private sector demand for borrowing. Borrowers get quickly fatigued when prices are not rising, and without price inflation, aggregate demand drops and economic growth stalls. Banks are not sitting on piles of unloaned money, they are unable to find credit worthy borrowers that have desire. "It's a myth that banks lend their reserves in some money multiplier style fashion and that the Central Bank can control the rate of inflation directly by steering the banks to act in precise ways." Hat Tip to Cullen Roche ~ More charts at www.chpc.biz
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