4 ms·

In what way are the interest rates on fixed loans artificial though may I ask?

• acd 6y ago
  Central banks intervene in the market and buys debts. Thus central banks distort the true pricing of debt since well if the central bank would not buy the debt the price of issuing that debt would be higher ie interest rate. Its artificial in that with quantitative easing the true price of the assets is distorted. "A central bank implements quantitative easing by buying financial assets from commercial banks and other financial institutions, thus raising the prices of those financial assets and lowering their yield, while simultaneously increasing the money supply. In contrast to conventional open-market operations, quantitative easing involves the purchase of more risky assets (than short-term government bonds) and at a large scale, over a pre-committed period of time. " source: https://en.wikipedia.org/wiki/Quantitative_easing https://en.wikipedia.org/wiki/Quantitative_easing