Do low rates exacerbate inequality? Most would say no, since low rates mean that borrowing is cheaper across the board. Except that it isn’t across the board.
Banks saying that demand for loans is low is them blaming consumers/businesses for not wanting loans. But this is one dimensional – there is more to the story!
Wall Street banks are reporting 2Q earnings, and they are struggling with loan growth. Or rather, the lack of it. With rates so low, why is this the case?
What else is in an interest rate? How does the interest rate fallacy play out in bank lending, as well as the repo market? Hint: Everyone is hoarding!
Conventional thinking believes that low interest rates mean money is easy – it does not. This is one of the most widespread misconceptions in finance/economics.