The Effects of Lower Interest Rates on Long Term Investment Projects

In one scenario, the public saves more money and banks have more funds to lend. The rate of interest they charge on loans will fall so long term investment projects are more attractive than short term ones. When people's consumption spending falls, this is when it makes the most sense for higher order stages of production to expand. Government has various tools at their disposal to force interest rates lower even without any corresponding increase in saving by the public. This is a separate issue from bob murphy’s book rothbard's mystery of banking.