It’s Scott Sumner who tells us to never reason from a price change. To which we’d add the corollary that we should never use a manipulated price to tell us about prices. Thus we cannot take the current price of money to be indicative of the non-manipulated price of money currently:

Their concerns were twofold. First, the amount of money sloshing around the global financial system then was scarce and therefore came at a high cost. Second, former and declining colonial powers don’t have the productive engine of entrepreneurs and skilled workers that allow an economy to power its way out of a crisis.

The first of these concerns has evaporated. Seventy years of accumulated post-war savings, whether stashed in western pension funds or the sovereign wealth funds of oil-rich nations, means that the price of borrowing has fallen to almost zero.

No, we can’t do that. The point of quantitative easing is to lower the price of money. We’ve rather a lot of QE at present, perhaps $12 trillion of it and that might well be a significant underestimate when we add the 2008 and following amount to the Covid.

We can indeed say that pensions savings have lowered the cost of money over the decades. We can even say that the current low cost of money is a good time to be borrowing. But what we cannot say is that the current price of money is a market price from which we can derive useful information about market prices.

All central banks have deliberately and with malice aforethought gone out to distort and manipulate the price of money in recent years. That price cannot thus be regarded as a market one conveying market information to us.

Stop doing this, everyone, the post-QE interest rate is not the correct market price of money.