Who has the most to gain from low and negative interest rates? Obviously debtors. The world’s biggest debtors are governments, with the US government number one. Debt today is like a listing ship. The objective of governments is to get themselves to the part of the ship that’s highest out of the water—the bridge—and cram everyone else below decks, submerged. The ship will sink, but governments and their cronies will let the other passengers drown before they breathe their last.
The real purpose—the only one that matters—of governments and central banks’ machinations since the financial crisis has been to finance governments. The world stood on the edge of the debt contraction abyss. Debt had reached an unsustainable level. Economies could no longer bear the load of interest payments and principle repayment. The marginal value of most debt, particularly that which funded consumption, had gone clearly negative. Even the value of debt incurred to fund “investment” was dicey, since much of that investment was actually speculation in disguise: house flipping, leveraged mortgage security arbitrage, share buybacks, and the like. The financial crisis was the iceberg rending the hole in the hull. Since then, the hole has only grown.
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