Euthanasia...

Keynes predicted the euthanasia of the creditor or rentier of the capital because he thought that land and labour are scarce, but capital has no reason to be scarce, because the central-bank can print money to stoke demand/supply to achieve full-employment. In the developed-world the central-banks have pumped so much money in the system that has made money so cheap that pushed interest-rate rock-bottom (Japan, US, Europe). In these countries, capital is cheap and not scare, at all; interest rates are at zero-lower-bound. These economies are very close to that (Keynes’ concept of) euthanasia, when interest rates are almost zero. If we take Japan as an example which is reeling under recession for past two decades and interest-rate near zero, euthanasia of the creditor seems very plausible. In all the three economies interest-rate is near zero and they are also probably in the famous Keynesian liquidity trap in which people accumulate reserves, when nominal interest-rate is zero and cannot fall further and in the expectation of lower prices forth they delay purchases.  Prices reflect scarcity and higher-prices reflect higher scarcity, even prices of labour (wages) and capital (interest-rate). During downturns both are not scarce as there is a cut down on investment and interest-rate (or increase in money-supply) and employment and wages (or increase in unemployment and labour-force).  In an attempt to increase demand and growth, these banks failed to understand the importance of savings which is also a function of real interest-rate (nominal interest rate minus inflation). It has also led to capital-fight. Moreover, in another attempt to make economy competitive we have also cut-down on real-wages (nominal wages minus inflation). The continuous increase in money supply and inflation has kept real-interest-rate-and-wages and demand low. Moreover, slowing population growth rate has also affected demand negatively. The central-banks are trying to push the economy through money-supply which is supposed to increase spending and inflation, but this is even going to hurt demand by lowering real-interest-rate-and-wages and might not work in the liquidity-trap. Savings also do have a positive effect on demand through lower interest rate and higher investment. Moreover, inflation will also lower real-wages. These banks policies might have a negative effect on demand by increasing inflation. The Fed is trying to push prices up which is opposite of the argument that increase in real-wages will also increase demand, the Pigou-Effect.  The effect is also helpful in the liquidity-trap by increasing real wages and demand. Growth-rate of the economy will increase. The Fed should try to release the repressed demand by increasing real-wages and stop inflation targeting and let the prices fall to increase demand. Lower interest rate, as they are, will help increasing investment. The interest rate in these countries might remain very low, probably zero, for an indefinite period of time (may be forever) because in these capital rich countries, capital is not scarce anymore...