Suppressing rates via QE multiplies the spending power of a dollar, which has a very similar effect as creating more currency

We should consider a lot of this to be zero-sum.

Creditworthy demand for loans doesn't magically increase when rates change or the Fed buys bonds.

In QE, like with accounting, you debit one side and credit the other. Netting to zero.

The effects it all has probably are real in terms of steering where people park their money. And that matters in the long run.

But that would mainly amplify whatever underlying incentive structures exist for investment.

If you steer people to stocks, and the economy has only ponzi schemes to offer, it might be because they haven't figured out a policy framework that promotes actual production.

But you can't magically add production by rewriting the knobs so that they all go to 11. Printing is differently zero sum, but the analogy works there as well.

> Creditworthy demand for loans doesn't magically increase when rates change or the Fed buys bonds

This is fundamentally untrue. Projects that don’t make economic sense at a high discount rate do at a lower one. This is measurable with mortgages [1], alongside side a host of other cases.

[1] https://app.oarklibrary.com/file/2/f047273e-32ba-40f7-9b83-5...

Link doesn't work.

Mortgages are one of the most annoying things to analyze in the economy, up there with healthcare, because of how much it is dominated by the government.

In the US a bank first makes a home loan, and then later gets money from the overnight market to cover the loan... likely from the Fed. They immediately sell the loan to Fannie and Freddie, GSEs that have actually been in conservatorship by the government directly since 2008. And every part of the market is protected and micromanaged and tax advantaged to oblivion. And every bank too big to fail, and loaded up with TARP funds and their bonds bought via QE.

Apply the principles of supply and demand to that, I dare you.

You're ignoring refinancing. Cash out refis on homes, businesses and government debt.

Somebody doing a cash out refi for 100k to add an extension to their house can certainly be inflationary

Interesting point. I'm sort of steelmanning the anti-monetary perspective to the best of my limited ability. Partly in hopes of hearing good rebuttals.

I will have to think about this.

Wrong! In reality low rates does not mean more people are qualified for loans. So what happens is more people don't get loans. Or at least many more. Now if you change laws to make it attractive for people with higher risk to get loans. Or give them loans from the government. Etc... That's different.

More people are qualified. Refinance a mortgage from 10% to 2%, and what does that do to your cash flow and ability to borrow more?

Businesses carry a lot of debt too, and can refinance lower and borrow more. Compare private sector debt levels today vs the 80s

It doesn't change the risk profile enough to mean that many more people are getting loans, at least historically.

Just because businesses can afford more debt, doesn't mean banks are going to give it to them. This is flawed logic.

There's a very clear and obvious relationship between prevailing interest rates and levels of debt