Paul GrahamVerified account

Why are you listening to someone who admits not knowing what he's talking about in the first paragraph, Paul? Real interest rates (rate - inflation) are negative all the time. There's nothing exceptional about nominal interest rates being negative.

As @prestonjbyrne notes, he was involved in the cleanup after the mortgage crisis, which perhaps gives him a a different perspective on the subjects of debt and systemic risk than economists.... economists like Bernanke, who said the subprime meltdown would be contained.

(as previously said to @prestonjbyrne) only complaint is that NIRP is a lot worse than just cheap debt. cheap debt is a promise to compound capital productively that you probably won't be able to live up to. with NIRP you explicitly intend not to.

Ultra low interest rates have been necessary to stave off deflation, which comes with its own problems. The question isn't whether interest rates are too low, but whether big lenders will be allowed to fail in the next crisis. That's a regulatory issue, not a central bank issue.

Deflation is not bad.