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Contra Guys: Unexpected effect of the zero interest rate policy is oversupply Add to ...

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What has been the long-term impact of the zero interest rate policy (ZIRP) implemented by central banks in the wake of the 2008 financial crisis? Many economists worried about inflation, stagflation and currency devaluation, but who anticipated widespread gluts of just about everything from coffee, iron ore, oil, potash and copper, to aluminum, steel, excavating equipment and container ships? Yet this is exactly what has happened. While some companies borrowed to pursue buybacks or mergers and acquisitions, many others took on debt to expand output.

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