Western world central banks tend to pressure prices down during economic shocks by withholding liquidity. This puts private markets in a gridlock and causes untold amount of damage to people's careers.
They kept them super high at 0%, up to 4% higher than the equilibrium estimate, which caused inflation to perpetually undershoot and people's careers to be stunted. On top of that, they started giving out interest on reserves which further contracted liquidity.
The growth in excess reserves happened because money being made artificially too good at retaining value compared to private assets, caused people, businesses and banks to hoard it. If central banks would have been sufficiently aggressive at giving it out, they would ironically have given out a lot less because people would not have event wanted that much and instead would have continued keeping their savings in better functioning private markets.
The government creating paper assets that have an above market return, puts a gridlock in the private markets and destroys people's lives.
Take the gold standard, do you think anyone was able to borrow gold and pay less back? Isn’t that the actual interest rate we are discussing here?
Gold in a free market would tend to self adjust.
Buying gold as an asset when there is a "flight to safety" and then selling it in better times when there are enough other good assets available such as stocks with good dividends would mean buying gold when gold prices are high and selling it when prices are low thus resulting in negative returns.
Negative real returns happen in free markets. Blocking them causes huge problems.
It's sort of like saying "pre-modern medicine, therapeutic bleedings were common, and therefor we should consider them again".
"Western world central banks tend to pressure prices down during economic shocks by withholding liquidity."
Well, we have seen gigantic quantitative easing in the US and the EU and also in China. Inflation - I assume that is what you mean by "pressure prices down" - keeps elusive. Japan has tried for decades to create inflation.
The only thing that the central banks in the world have managed is to create a gigantic asset bubble, via the so called "asset price inflation". They basically build a cash pipeline to all the asset holders. Make the rich richer and the poor poorer.
Well, you failed. Interest rates are historically low. We have seen a gigantic amount of liquidity injected over the last decades.
"The poor are much much more hurt by overly tight money."
What is the most expensive acquisition in their life for the majority of the people? Real Estate. Prices are through the roof thanks to the central banks. Young people are just getting priced out of the market.
Real helicopter money has not been tried yet.
A 7 fig house still costs 7 figures. In many countries you can not lock in the interest rates for 30 years but they get re-adjusted after 10 or 15 years. Could be a bad awakening for some.
"Asset prices are bounded by the cost of producing new houses"
1. "asset prices" are not only houses. But also Stocks for example
2. The most expensive thing is most of the time not the house but the land. "Buy land, they stopped making it! - Mark Twain"
Read a few books about economics dude.
Stocks can also be created.
Land is a hard one. We have no choice but to share it somehow. But overly tight money is really really not the way to make land affordable. Reducing land prices through overly tight money is basically price control through making people too unemployed and too poor to have demand for land. It's an exceptionally destructive approach.
It is the other way around. Please google "asset price inflation".
"It's an exceptionally destructive approach." Only in your head my friend.