This is an extremely astute observation. The real problem with this is that it also negates the necessity to liquidate mis-appropriated mal-investments which keeps the cost of those elevated relative to their true value. Look at the cost of housing. Instead of the pricing falling to clear the excess inventory and ultimately minimize the losses associated with the devaluation, we’re propping up the prices leaving ourselves stuck with a glut of excess inventory that we can’t get rid of in spite of ZIRP. All because the value is misaligned with the incentive.
This holds true for our currency also. What is the value of a dollar if it has no accretive increase over time. Interest is the cost of money coordinated with time. If it cost nothing additional to borrow over time then why spend money you have today when you can spend the future generations money instead? Yet are those future dollars being spent to ensure a higher GDP in the future or just to project to image of prosperity today? The smoke and mirrors running out of the Fed and Treasury just boggles the mind.