Expansionary monetary policy can lead to the misallocation of savings

The expansionary monetary policy conducted since the subprime crisis has: Not prevented a decline in net corporate investment (net of capital depreciation); Led to a sharp rise in asset values (equities, real estate, companies, etc.). This shows that the expansionary monetary policy has led to the misallocation of savings. Savings have been used to buy assets at above-normal prices instead of to buy productive capital. The counterpart of savings is then excessive asset prices and not corporate capital. It is therefore quite possible for abnormally low interest rates to lead at once to asset price bubbles, underinvestment and deindustrialisation.