How the rich get richer - Money in the world economy | DW Documentary

Recent questions

• How are low interest rates impacting savers?

  Low interest rates are causing savers to lose billions annually, as traditional savings accounts yield minimal returns. This makes it challenging for individuals to grow their savings effectively in a low-interest rate environment. As a result, people are exploring alternative ways to store their money, such as investing in real estate or shares, to seek higher returns. The influx of cheap money into the world economy has led to a concentration of wealth at the top, with assets like real estate and shares increasing in value. This situation has created a dilemma for savers like Carl Heinz Ise, who must navigate the challenges of investing in a market where interest rates are almost zero.

• Who benefits from the flood of cheap money?

  The flood of cheap money primarily benefits states and the wealthy, allowing them to accumulate more debt and assets. Low interest rates enable governments to borrow more money at lower costs, while the rich can leverage cheap credit to increase their wealth through investments. However, this advantage disadvantages the middle class, as they struggle to grow their savings in a low-interest rate environment. Economist Max Otte warns that the flood of cheap money poses a significant risk to the global financial system, as it can lead to economic instability and wealth inequality. The financial industry's deregulation history has contributed to this situation, with banks focusing on financial transactions rather than goods, causing problems on a global scale.

• What impact does the monetary flood have on real estate markets?

  The monetary flood has a significant impact on real estate markets, as trillions of dollars and euros are injected into the world economy. This influx of cheap money has led to soaring real estate prices, particularly in markets like London, where trillions are traded. The increase in real estate values raises concerns about sustainability and inequality, as the wealthy benefit from rising property prices while others struggle to afford homes. The concentration of wealth at the top is further exacerbated by the monetary flood, with assets like real estate becoming more valuable. This situation highlights the need for a more regulated financial system to address the challenges posed by the flood of cheap money.

• How do private banks create new money?

  Private banks create most new money through deposit money creation, allowing them to generate profits out of nothing. This privilege was previously held by governments and princes, but deregulation in the financial industry has shifted the power to private banks. By creating money through deposit money creation, banks can lend out more money than they actually hold in reserves, effectively creating new money in the economy. This practice enables banks to profit from interest payments on loans and investments, contributing to the concentration of wealth at the top. Initiatives in Switzerland advocate for only the National Bank to create money, aiming to redirect billions in interest payments to the public purse and challenge the financial industry's control over money creation.

• What challenges do innovative companies face in accessing funding?

  Innovative companies like Zion, an eco-friendly electric car project, struggle to access funding from banks due to their preference for secure investments. Banks often prioritize investments that offer lower risks and higher returns, making it difficult for startups and innovative ventures to secure the funding they need to grow. This challenge highlights the barriers faced by innovative companies in obtaining loans and financing for their projects. Without access to sufficient funding, these companies may struggle to develop and bring their ideas to market, hindering progress in sectors like technology and sustainability. Individuals like Carl Heinz Ise recognize the importance of a more regulated financial system to support innovative companies and avoid future financial disasters.