The redistributive effects of zero-interest-rate policies

It is important to have a broad view of the redistributive effects of the zero-interest-rate policies in OECD countries: These policies would not be possible without the skewing of income distribution to the detriment of wage earners, which has led to low inflation and made the zero interest rates possible. A first redistributive effect therefore goes from wage earners to companies; Since interest rates are significantly lower than growth rates, savers are taxed to the benefit of borrowers (governments, companies, indebted households). The losers from the zero-interest-rate policies in OECD countries are therefore wage earners and lenders (savers, banks); the winners are borrowers. If the number of losers (wage earners, lenders) exceeds the number of winners (indebted households, companies’ shareholders) in a democracy, then this type of equilibrium cannot last and will be rejected by voters.