What does the current interest rate tell us about the dominant economic system in the world?
The real interest rate in the country is minus 2.7% since the current interest rate is at 2% and the inflation rate is 4.7%. With this kind of economic and monetary environment, savers are losers and borrowers are winners . “Revving up economic activity” is the goal why BSP keeps interest rate at the current level. Turning to mises.org for guidance on how to see this kind of environment, I stumbled upon Murray N. Rothbard’s article about The Interest Rate Question . According to him, this is one topic where “financial writers are mired in hopeless confusion.” If this is the case then, “how can we expect the public to make any sense of what is going on?” And then at the middle section of the article, he identified the real cause of lower interest rates. He describes this as “a repeated injection of inflationary bank credit by the Fed (In our case, replace the Fed with BSP).” Such monetary policy will “keep the artificial and unsound economic boom going (in our current situation, “revvi...