Monetary policy isn't really monetary policy; it's debt policy. Loose debt policy entails monetizing government debt with central bank debt, both essentially made up out of thin air, which suppresses interest rates. It is the lower rates than what would prevail in the absence of a central bank that leads to more leverage (question 2). Speculators are certainly not insensitive to the market interest rate, it is essentially the price of the raw material--money--for their speculation (question 2). Per question 1, central bank policy to promote debt never "works," it merely puts more fiat debt in the system. That can lead to more asset price roller coastering, but that depends on the level of debt already in the system. An economy can become saturated with debt, where additional debt has little effect on production, investment, or prices and is basically inert. That is the state we reached last year. Per question 3, that is why additional fiat debt does not always lead to inflation in goods and services; it does not spur additional demand if consumers and businesses are trying to reduce debt, not take on more. As we are finding out now, it doesn't always lead to inflation in financial asset prices, either. It is a simplification, but think of debt as a factor of production, speculation, and consumption that has diminishing marginal returns that can go to zero or negative. That is what we have seen since the last financial crisis; and the marginal return on debt is now clearly negative. It is a product of governments and central banks not allowing markets to clear by injecting massive amounts of fiat debt into the system, supposedly to save it. It's like curing alcoholism with binge drinking. Having shot their wad during the last financial crisis, governments and central banks are now impotent to address the gathering debt deflation, and this time markets will clear at much lower prices. It will get ugly.