Thursday, April 14, 2016

Central Banks Have It All Wrong
"Garbage In, Garbage Out"
Economist Joseph Stiglitz sees central banks as making mistake in cutting interest rates .. "The underlying problem, which has plagued the global economy since the crisis but has worsened slightly, is lack of global aggregate demand. Now, in response, the European Central Bank has stepped up its stimulus, joining the Bank of Japan and a couple of other central banks in showing that the 'zero lower bound' — the inability of interest rates to become negative — is a boundary only in the imagination of conventional economists. And yet, in none of the economies attempting the unorthodox experiment of negative interest rates has there been a return to growth and full employment .. If central banks continue to use the wrong models, they will continue to do the wrong thing."
LINK HERE to the essay

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