And if you&#x27;re a country you keep going :<p>5% turns out to be too much -&gt; you lower it to 4%. You simply legislate this.<p>You loan more. Until 4% is too much as well ...<p>4% too much ... 3% ... 2% ... 1.5%<p>Once you go below a reasonable chance of non-repayment (countries have survived on average ~60 years, because a lot were &quot;interrupted&quot; or ... during WWII and a lot of debt was &quot;forgiven&quot; at the point of a gun)<p>Now you&#x27;re a country ... so you legislate that people loan you money, making it sound vaguely reasonable by saying that&#x27;s what they&#x27;re paying for FDIC insurance (or equivalent, in Europe). Of course you don&#x27;t have the money, nor the ability to borrow the money, that you&#x27;d need to actually satisfy a &quot;real&quot; FDIC incident (one component of &quot;too big to fail&quot; banks).<p>The banks realize that you&#x27;ve done this, so what do they do ? They borrow massive amounts of money to one another. Why does this help ? Well it guarantees that anyone who&#x27;s done this borrowing of large amounts of money can&#x27;t be thrown under the bus. Why not ? Because if one of them goes down, it will take down others (by not repaying the loan). So the government is forced to save even the ones where the FDIC reserves might actually suffice. Also, you pay out this loan to your shareholders and management (to yourself, essentially).<p>1.5% ... 1% ... 0.5%<p>The banks are losing money, because they can&#x27;t convince investors their loans are probably backed. But you&#x27;re a government ... you simply legislate that these companies that loan you lots of money exist, and you save them. And then they take more risk, and more risk, and fuck up, and get bailed out, and take yet more risk, maybe get bailed out a bit more. Your interest rate devaluations let you borrow more, but you have to use it to save the &quot;too big to fail&quot; banks&#x2F;companies.<p>Note that the government is not innocent in the risk taking : because the government is effectively taxing loans (by making sure they can&#x27;t get a proper risk premium, and have to loan to the government -&gt; other parts of the bank need to make enough profit to make up).<p>And of course you&#x27;re still borrowing money for the reasons you started to borrow money.<p>0.5 ... 0.25 ... 0 ... -0.05 ... -0.3%<p>Now you&#x27;re having the problem that these banks are bleeding money - fast. And they can&#x27;t charge their customers, because they can simply withdraw money and keep it in their mattress.<p>So you ... well this is where we are today ... what&#x27;s next ? Outlawing cash, gold, a lot of types of stock, and directly taxing all bank deposits is the obvious answer. And the only other option is to lower global government expenses by ~12%. Essentially a wealth tax.<p>There is of course another option: if they don&#x27;t make a choice there is one other solution : having 10%+ inflation in Europe and America. All mortgages at 15% for a year or two and just deal with the miser that&#x27;ll cause. This is what will happen &quot;by default&quot;: if the central banks fail to agree on a course of action.