<i>This argument really needs more economics to back it up</i><p>Japan has been engaging in this kind of monetary policy for over two decades.<p>Bloomberg: &quot;Japan Must Let Zombie Companies Die&quot;[1]<p><i>A big fall in employment is something that has real human consequences in misery, ill-health, and even death.</i><p>I don&#x27;t think that&#x27;s a valid argument to prevent short-term unemployment at all costs. Winter brings death to trillions of leaves every year. Does that mean it should be stopped? Half a decade ago Detroit&#x27;s situation was hopeless. Detroit declared a long overdue bankruptcy in mid-2013. By mid-2015, it&#x27;s described as a &quot;revival template for struggling U.S. cities&quot;[2]<p><i>Also, your interest rates&#x2F;capital investment argument is the wrong way up.</i><p>I&#x27;m afraid it is the right way up. The effect you&#x27;re describing is only valid in the short-term, but it is completely the opposite in the long term. In the long run, nominal interest rates = real interest rates + inflation[3]. As you raise nominal rates, real interest rates remain constant, and inflation must <i>rise</i> to compensate. To encourage investment in the long run, we need <i>higher</i> interest rates. Lower interest rates increase spending in the short term, following the effect you&#x27;ve described. In the underlying economy, this increase in spending is funded by consumption of real capital. (e.g. refraining from capital maintenance and using the funds for consumption activities instead.)<p>[1] <a href="http:&#x2F;&#x2F;www.bloombergview.com&#x2F;articles&#x2F;2016-01-20&#x2F;japan-must-let-zombie-companies-die" rel="nofollow">http:&#x2F;&#x2F;www.bloombergview.com&#x2F;articles&#x2F;2016-01-20&#x2F;japan-must-...</a><p>[2] <a href="http:&#x2F;&#x2F;www.usatoday.com&#x2F;story&#x2F;opinion&#x2F;2015&#x2F;07&#x2F;06&#x2F;fixing-detroit-mismanagement-housing-transit-revitalization-strategy-struggling-us-cities-column&#x2F;29577383&#x2F;" rel="nofollow">http:&#x2F;&#x2F;www.usatoday.com&#x2F;story&#x2F;opinion&#x2F;2015&#x2F;07&#x2F;06&#x2F;fixing-detr...</a><p>[3] <a href="https:&#x2F;&#x2F;en.wikipedia.org&#x2F;wiki&#x2F;Fisher_equation" rel="nofollow">https:&#x2F;&#x2F;en.wikipedia.org&#x2F;wiki&#x2F;Fisher_equation</a>