Central banks were trapped into a doom-loop of falling interest rates

Evidence

It was not the intention of central bankers to replace profits. They simply fell into a trap they had created for themselves. The panic of 2008 had killed off the demand for money to be invested, causing an oversupply of money that depressed interest rates. The more interest rates fell, the greater the investors’ conviction that things were so bad it would be madness to invest. And yet, trillions of dollars of central bank money continued to pour into finance, and so the doom-loop continued, with interest rates going further and further south: to zero or below. — Yanis Varoufakis, Technofeudalism, 415

Categorization

• XREF: Resonates with the concept of a policy trap or doom-loop also seen in discussions of the Eurozone crisis and Japan’s lost decades. — connects to: Populist attacks on central banks intensified while technocratic crisis responses expanded — Aris Komporozos-Athanasiou, Speculative Communities: Living with…, 702; Financial bubbles burst when current production cannot repay loans borrowed from the future. — Yanis Varoufakis, Technofeudalism: What Killed Capitalism, 825; Central bankers inadvertently financed capitalism’s own demise — Yanis Varoufakis, Technofeudalism: What Killed Capitalism, 388 (+2 more)
• corroborated: 2 independent passages support this claim — Yanis Varoufakis, Technofeudalism: What Killed Capitalism, 415

Broader Connections

• Downgraded sovereign debt collateral trapped leveraged European banks in a funding spiral #exemplifies (0.82) — Mark Blyth, Austerity, 238
• Borrowing against unproduced electricity created the 2022 energy crisis doom-loop #exemplifies (0.72) — Yanis Varoufakis, Technofeudalism, 985