Originally Posted by Frank101
This is Keynes idea of multipliers and circular flow. In reality, you can't invest money you don't have without major risk and leverage. This is why capital comes first, you need to accumulate wealth to risk and invest. The way monetary policy is, it forces people who have savings and retirement accounts to take riskier bets investing in companies rather than relying on accumulating interest for loans.
I don't like it for similar reasons you don't. It's not fair for someone who chooses to under consume in the present in order to live more comfortably later on in life (retirement). With no real return on savings, the Fed's policy encourages spending money now before it becomes less valuable in the future and therefore doesn't go as far.
yeah you can't have your cake and eat it too...
nominal interest rates reflect the opportunity cost of holding cash, so periods of low inflation are generally going to be correlated with a low expected return on capital, and hence low interest rates.