The US has now 'enjoyed' a free cost of money for some six years; and the logic behind zero-interest rate policies was simple enough: after the trauma of 2008,...

The US has now 'enjoyed' a free cost of money for some six years; and the logic behind zero-interest rate policies was simple enough: after the trauma of 2008, the animal spirits of entrepreneurs needed to be prodded back to life. Meanwhile, the past few years have reminded everyone that the average entrepreneur/investor basically borrows for two reasons: 1) Capital spending: When business is expanding the entrepreneur borrows to open a new plant, or hire more people, etc. 2) Financial engineering: The entrepreneur/investor can borrow in order to purchase an existing cash-flow or stream of income. Unfortunately, the second type of borrowing does not lead to an increase in the stock of capital... So instead of an increase in an economy's capital stock with financial engineering all we see is a net increase in the total amount of debt and a greater concentration of asset ownership. And the higher the debt levels and ownership concentration, the higher the system's fragility and inability to weather shocks.