so there must exist some real rate of interest payment that can induce investment spending now
among qualified borrrowers
in this system ???
assume we can't alter the inflation expectations let alone the current inflation rate
the firms we want top induce to spend
face radical uncertainty about future price level movement
security markets only tell you what specs expect next day really
now what ???
uncle its your move
go near zero on all rates
yup
]now given the zero bound
the state of the rate structure flattened down to where holding money
is just as good as holding a note
what happens next or better what just happen
as the rate structure approached this point
when all bonds of no matter the length and repayment structure got so damn close to the vansihing "return " point ???
what if we're still hung up above the reat rate necessary to move firms to spend more ??
in fact spend enough to begin a recovery that won't stall out
look to the creditors to motivate them to lowerr standards
okay we could have uncle insure against default but still why
would that work unless it was wreckless a hazard liquidating madness
uncle inducing an oklahoma loan rush
sound firms for sure would up their locked in credit line if they could
imagine a ten year no reduction essentially costless to carry for any part
converted to a loan
after refinancing which doesn't build anything real
what next
sure any firm might want that locked in if it could
but borrow to pay for some one to make something real ??
why ??
the production sysatem, is in heavy slack mode
taking the loan money to build a factory
or build a machine even or write some soft where or do r and d
why ?? now ??
what does that mean if rational firms are cadging cash already ??
they might buy up each other and existing real assets like timber land and oil fields
but add new capacity actually induce new productionb
why ??
of course it happens
but out of unquenchable spirits that fearlessly face down current adversity
these folks will act regardless of rate even with borrowed money
...so long as bankers will lend
the uncle default insurance propells the no fear of fucking hazard conditioning
that built the minsky moment in the first place
this conditioning is precisely what sober capitalists want to expunge
by harsh consequences
err for the other guy
