What happens if interest results stay so low/decline even further?

[Taco Truck 🚚]

So what happens if we see a long prolonged period of effectively zero interest?

We've already seen a prolonged period of effectively zero interest rates.

Various distortions will occur.  House prices will go up.  Stock markets with go up.  Tons of bad startups in Silicon Valley will get billions in funding.

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http://www.businessinsider.com/afp-silicon-valley-mulls-invasion-of-unicorns-2015-4

You can also have negative interest rates.  BoNY had negative interest rates for large accounts a few years ago.

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http://www.businessinsider.com/banks-discussing-negative-interest-rates-for-consumers-2015-10?r=UK&IR=T

[Taco Truck 🚚]

Where is the money going?

As I said we are seeing asset inflation in the stock market, housing market, and in Silicon Valley as a whole.

Banks have been lending... just not to consumers.

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http://www.cnbc.com/2015/02/18/banks-arent-lending-to-consumers-heres-who-is.html

Seems even as deposits have gone up the amount loaned out has decoupled.

[Taco Truck 🚚]

We're facing the point where monetary has basically done everything it can do. Helicopter money hasn't been very effective, we can't really get beyond the zero lower bound, so the conclusion is we need fiscal policy to do something since our economy is still relatively stagnant in terms of wage increases. Sadly enough, I think it's going to be in the form of military expenditures rather than the infrastructure improvements we need.

What reason is there to seek intervention to raise wages if inflation remains low?

Doesn't matter if inflation is low for a handful of years if middle class wages haven't kept up for decades.