• commercial

  • Publications

motivation or interest

Zero or negative interest is said to be a lack of currency demand. The question for central bank economists should be why?

Obviously, with a high savings ratio there is no need of immediate credits. It is crucial to think about cause and effect of economic actions to find a direction out of the currency conundrum. The policy of the ECB is making credits as cheap as possible to set an impulse to new investments and, on the other hand, setting a price to savings.

Take this description into our daily lives. Would you stop saving money because of the price of a piggy bank? It is much more likely that you would spare the money without a costly accessory.

Quite the same situation of cause and effect is illustrated with consumption. Maybe you eat a bigger dish of spaghetti if there is an offer. But after having a Pizza you won’t take the offer regardless to the price. The remark of the waiter for a final espresso could be a favorable hint for extended consumption. With the wrong products you can’t be convincing no matter to the price.

Consumption is trigged by motivation first and only in a dependent step by the price. A relevant impact to interest is possible by innovating products and new motivation for consumption even through regulation.

(Visited 213 times)

Leave a Reply

  • commercial

  • S2n - ISSN 2366-0104