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<p>[QUOTE=&quot;InfleXion, post: 2237988, member: 29012&quot;]Using Gibson&#039;s Paradox as a springboard, we could reasonably attribute global deflation to zero % interest rate policy. </p><p><br /></p><p>This actually makes perfect sense from the standpoint that any interest rate other than the free market interest rate is market coercion, leading markets further away from equilibium. This creates pressure in the opposition direction of whatever action was taken out of coercion. Low interest rates being inflationary creates deflationary pressure thereafter. After all the very purpose of bonds and their interest rates is to serve as a measure of risk in the market, and that purpose is being circumvented by central banks cannibalizing their own bonds for the sake of controlling the interest rate.</p><p><br /></p><p>The quagmire that central banks are in now is that the nations they are exploiting have acquired so much debt made possible by inflationary policy that to raise rates any amount whatsoever would risk insolvency and default. So they absolutely need to raise rates, but they cannot do so without making the situation they&#039;ve created worse.[/QUOTE]</p><p><br /></p>

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