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ZIRP is a massive wealth transfer as opposed to what? Positive rates? ZIRP is a wealth transfer in the opposite direction if you compare it to what should be i
by dav-ycombinator 11y ago
ZIRP is a massive wealth transfer as opposed to what? Positive rates?
ZIRP is a wealth transfer in the opposite direction if you compare it to what should be in place right now: very negative rates.
The wealth transfer argument makes no sense in the context of monetary policy.
- x5n1 11y agoIn order for anyone who has money in the bank to pull out money, they must still see a positive IRR, compared to leaving money in the bank. If they don't the central banks eat that money. So yeah it's a wealth transfer from private money to central bankers. Or else the government should ask for the difference for its own coffers and reinvest that into the economy.
- maxerickson 11y agoThe government gets the difference: http://www.latimes.com/business/la-fi-federal-reserve-profit-20160111-story.html http://www.latimes.com/business/la-fi-federal-reserve-profit...
- bradleyjg 11y agoHow it is a wealth transfer? Is there some fundamental right to risk free interest? Banks provide a service and those services cost money. If the value to the bank of your money is less than it costs to provide those services than you need to make up the difference. No one is being "screwed".
- TheOtherHobbes 11y agoThe way it actually works is that if the value of a bank to society is less than the profit the bank wishes to make, even after making stupid and bad business choices, taxpayers need to make up the difference. Hence "screwed."