Economic columnist lamented this week the absence of investments at a very moment when interest rates on loans “have never been so low for businesses”.
Although such statement needs be treated with caution, it has the merit of raising the issue of the relationship between debt and economic growth.
Easy money, a growth factor?
Or easy money, a consequence of an uncontrolled growth?
The accumulation of debt processed by the western economies during the decade might have caused a surge in rates.
That did not happen.
The point of no return having been surpassed, the monetary authorities had no other choice but print money – in the form of “quantitative easing” – thus freeing up masses of easy money.
Perhaps the worst has been avoided but growth is not there yet.
Difficult to establish a relationship between debt and growth.
M. Modigliani and M. Miller were not mistaken. Risky financing is a condition for the growth.
Dominique F. Pasquier