Friday, June 03, 2016

Thanks To The Federal Reserve,
America Is Going Deeper Into Debt 
As Real Incomes Fall
Mises Institute posted essay highlights how rapid asset price appreciation as a result of monetary easing has outpaced wage growth .. "The unintended consequence worked against accommodative policy’s desired substitution effects and suggests further easing would likely yield diminishing results if asset price appreciation continues to outpace real income growth. .. Inefficiencies within the monetary policy transmission mechanism have resulted in income effects becoming greater than the substitution effects. Under this scenario, ultra-accommodative policy may induce further saving by asset-less consumers to further weigh on aggregate demand. Additionally, policymakers should exercise caution if increasingly aggressive and unconventional reflationary policies do not yield intended results."
LINK HERE to the essay

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