Ditch Zero

Stretched by fewer thoughts that leave me
Chasing after my dreams disown me
Loaded with danger
--The Fixx

Bill Gross argues that central bankers should ditch zero interest rate policy (ZIRP) but quick. Why? "Because zero bound interest rates destroy the savings function of capitalism."

Indeed, it should be obvious that without savings to provide capital for investment, there is no capitalism.

ZIRP is hurting mainstream Americans. People are less prone to save and invest in their future when interest rates are low. As Gross observes, "They are not so much in a pickle barrel as they are on a revolving spit, being slowly cooked alive while central bankers focus on their Taylor models and fight non-existent inflation."

Gross is wrong about inflation. Thru ZIRP policies, central banks have increased money supply by trillions--the essence of inflation. This inflation has increased wealth disparity as it has promoted higher security prices while slowly devaluing dollars in the wallets of the masses.

Ditching ZIRP increases savings and economic growth and reduces inflation.