patrick.net

Ceffer says

Low interest rates are designed to punish passive savers and force them to invest in active businesses, real estate, stocks etc.

This makes some sense if you remove "are designed to" out.

Low interest rates are good for other markets for a number of reasons, especially because money can be borrowed for cheap and invested in these other markets. But also for the reason you suggest, although it's usually framed this way: People pay higher prices for stocks and accept lower yields for stocks when higher yields are not available in money markets.

But the idea that for example equity markets spur productivity more than debt markets? I don't think so.

Debt markets are strongly affected by the deleveraging that's going on. Debt and cheap money (cheap interest rates) can be great for businesses, and individuals, when they don't already have to much debt. Or too much surplus capital seeking a decent return.

I do think there may also be an effect that low rates adversely affect small business borrowers, because the lenders aren't making enough with the low rates to compnsate for the risk of borrowers defaulting. So the low rates are mostly available only to huge companies and those who don't really need to borrow, or to those who will borrow with moral hazard.

Well, to answer the OP, it might be likely that the Republican candidates would have endorsed tighter money policies, which would have increased unemployment, at least at first. Using unemployment as a sole metric of economic success is more of "kicking the ball down the road" and short term expediency driving political decisions.

European economies such as Germany are pathologically fearful of inflation because they have been wrecked by it in the past. Their monetary policy is more geared towards stability and predictability of inflation to preserve currency integrity, and they will pay the price of higher unemployment to get it. However, they also have social engines in place to ease the burdens of unemployment on the unemployed, more so than the USA.

They would consider the low interest, print money until the economy recovers strategies to be enormously risky and reckless. The economy does not do anybody any good if you have a period of higher employment, followed by an out of control period where everybody has to use wheel barrows to carry cash to buy ordinary commodities. Then the policy becomes the staggering drunk reactionary policy of more draconian interest rates and burning brakes to control the inflation, with the currency itself becoming vitiated.

Of course, inflation serves the interests of the debt drunk as well by allowing present day debts to be paid back with future increasingly worthless dollars.