Free market economist Thorsten Polleit sees policymakers as realizing that the policy of 0% interest rates is not working .. “Central banks are quite unlikely to abandon the idea of pushing real — that is inflation-adjusted — interest rates into the negative. What they might have in mind is allowing for “somewhat higher” nominal interest rates, accompanied by ‘somewhat higher’ inflation, making sure that real interest rates remain in, or fall into, negative territory.” .. references the Federal Reserve of San Francisco paper published on 15 August 2016 that monetary policy should rethink & possibly allow for an inflation of more than 2% … “Inflation — be it 2, 4, or more percent — doesn’t make a society better off. On the contrary. For instance, inflation corrupts economic calculation, thereby causing entrepreneurs to make the wrong decisions. The stimulus inflation initially is due to the errors which it produces .. Consider a case in which the central bank promises an inflation rate of 2 percent. After people have entered into their contracts, the central bank increases inflation to 4 percent. People will learn and expect future inflation to be 4 or even 5 percent. The central bank, if it wants to stimulate again the economy, has to bring inflation further up .. This kind of policy would ultimately lead to high or even hyperinflation — which has been observed in many countries around the world.” .. Polleit says this policy will help governments to manage their massive debt levels .. “It would be surprising if governments and their central banks will not opt at some stage for higher inflation in an attempt to escape the problems their policies and the issuance of unbacked paper money has caused in the first place. Alas, it wouldn’t be the first time in monetary history that unbacked paper money would be deliberately debased.”
LINK HERE to the essay

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