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Interest is not a monetary accident or a mere policy lever but the price that compensates for deferring consumption and for bearing risk over time. Because every asset's value is future cash flows discounted by an interest rate, the rate sits beneath every other price in the economy, and suppressing it distorts all of them at once.
When borrowing costs fall near zero, companies whose profits can't cover their interest bills can keep refinancing instead of failing. These zombie firms tie up labor and capital and hold down prices for healthier competitors, which blocks the creative destruction that normally moves resources to more productive uses and drags on productivity growth.
Looking at near-zero rates as a redistribution mechanism, not a neutral stimulus, shows who gains and who loses. Lower discount rates inflate the prices of stocks, bonds and property held mostly by the already wealthy. Savers, pension funds and younger people who must buy assets later pay the cost, so easy money widens wealth inequality.
Suppressed interest rates push investors into riskier assets as they reach for yield, and they encourage leverage because debt service looks cheap. The result is a sequence of asset bubbles and a financial system so dependent on cheap money that raising rates risks collapse. That dependence traps central banks into keeping rates low, which feeds the next bubble.
In early-18th-century France, John Law expanded paper money and pushed interest rates down to support the price of shares in his Mississippi Company. The resulting speculative mania collapsed in 1720 and ruined many investors. The episode is an early template for how central-bank-style rate suppression can fuel an asset bubble that ends in bust.
Following Wicksell's distinction between a natural rate and the market rate of interest, the book argues that when central banks set rates far below the return on capital, price stability can hide a growing credit imbalance. Stable consumer prices therefore do not show that policy is neutral. The damage appears in credit booms, misallocated capital and asset inflation rather than in the CPI.