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The New Political-Economy | Russell Napier, Edward Chancellor, & Helen Thompson

Hidden Forces

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The Role of Interest Rates in Social Discontent

Low interest rates diminish the Schumpeterian creative destructive destruction forces in an economy. They lead to the misallocation of capital, contribute to low productivity growth and low income growth. At the same time, these wealth bubbles benefit those who either possess wealth to begin with or older generation. And they disadvantage younger generation and people who don't own assets. So if you put that together, low income growth and rising inequality on the back of asset price inflation, you then get a rising discontent with a market-based system.

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