The most concerning danger in the global economy is that central banks have entered an unstoppable race that is creating larger and riskier imbalances, as shown here: “Asset Bubbles to Zombie Companies: The Dark Side of Rate Cuts” shows.

In the eurozone, there is no need to cut rates and launch another stimulus (which has never been abandoned, by the way, since all maturities are repurchased). The excess liquidity in the ECB exceeds 1.79 trillion euros, rates are already negative and the eurozone governments are issuing debt at negative and artificially low rates. Additionally, the spread between junk and high-quality bonds has fallen to historic lows.

The problem of stagnation of the eurozone and other economies has nothing to do a need for lower rates. Businesses and consumers are not going to take more credit or invest more because of an 0.5% change in already artificially-depressed rates. The problem of stagnation in many economies is not due to lack of monetary stimulus but to excess of it Zombie debt is perpetuated, overcapacity is maintained and malinvestment in high risk and low productivity sectors is encouraged.