Follow-Up on my Negative Rates Post

The excellent Spontaneous Finance blog explains in technical terms why banks will not start lending due to negative rates from a micro-economic, i.e. bank perspective. For Austrians, general statements about the economy need to be funded on microeconomic insights (methodological individualism). Macroeconomic aggregates have no meaning, since individual actors cannot observe them and hence do not act on them. (Exceptions may be some financial market participants, other than value investors. But then again they usually do not produce things in the real economy, although they can certainly influence outcomes in the short run). In that respect this post sums it up nicely.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s