Economists don’t entirely know why rates have been so low for so long, or whether they will turn out to be mainly a boon or a danger.
Says Mankiw, author of the economic textbook widely used.
The solution is to make that plain in page one of every textbook,'This author is clueless about interest charges and what they are'.
The answer is: Interest charges are the instantaneous swap that balances a queue of loans against a queue of deposits.
Interest rates, on the other hand, are an insurance function outside the realm of currency banking. Economists foul this up because they cannot admit of the government default sequence which always happens.
Mathematicians in the sandbox have no such qualms. But if economists want a clue they need a model of value added chains, a calculus for logistics. This is a queuing problem.
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