MOST people want to see low interest rates. But low rates alter investor behaviour, distorting it in ways that can have serious consequences. As the excellent book The Price of Time: The Real Story of Interest by financial historian Edward Chancellor makes clear, there are many negative aspects of so-called “easy money”.
Easy money keeps the economy aloft, at least temporarily. But low interest rates can make the economy grow too fast, bringing on higher inflation and increasing the probability that rates will have to be raised to fight it, discouraging further economic activity. This oscillation of interest rates can cause an economy to see-saw between inflation and recession. No one should...
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