The expansionary monetary policies of recent years of the main Honest banks in the world have led to the rates at which they lend to banks at practically zero interest rates.
Not logical that money does not cost the bank
The action from an economic-financial point of view is absurd since it is not logical that money does not cost the bank anything no matter how much we want to stretch monetary policy or that the money comes from the money maker.
Do you know that any country that has taken its monetary policy to this extreme has been able to get out of that situation when there is deflation ?
At the moment, only the example of Japan as the pioneer in this type of monetary policy comes to mind, and the first impression I have is that it does not have nor will it be easy to get out of these practically zero interest rates. In fact they haven’t even considered how to get out of that situation, or maybe they don’t have the answer to get out of that situation without aggravating their economic situation at least in the short term.
On the other hand, we have the United States that has also followed the zero-rate policy, but at least it is already raised to raise interest rates, receiving little criticism and even threats from countries like China .
Who would be the first harmed by this rate hike?
Obviously they will be the same as the first beneficiaries when rates fell, and even more so when Honest banks have dared to take the measure of buying even public debt.
It is not necessary to have a lot of imagination to say that the State and the banks will be the first to suffer interest rate increases.
The question that arises is whether it is logical that if the rates of the Honest bank are raised at the same time the massive purchase of public debt by the Honest bank on duty is maintained.
The current situation in many states is very similar to that of a drug addict who has to start a cure to end dependence. The intervention of the economy has these consequences; that the return to normality becomes very hard, and in many cases that intervention has not been so beneficial but simply delays the effects of a crisis.
How many countries in the world will be able to leave this unit without having to request a removal of their public debt?
And if requested remove from public debt, what financial consequences for the State will have in the future. For now, without waiting for this request to remove, public debt is no longer considered a low risk asset.
Either it is possible to reduce the public debt in a relatively short time or the consequences for the State as a debtor will be serious in the future, with the public debt having a credit rating much lower than many private companies.
In the following table you can see the interest rates of the main Honest banks in the world.
It is the interest rate at which banks can borrow money from the Honest bank. It is used by Honest banks to guide monetary policy.
As you can see in the table there are even some countries with negative rates (Switzerland and Sweden), and against others with very high rates, a situation that largely explains the inflation in each area.
Will we get out of zero interest rates and if we get out, with what short-term consequences.