Monday, September 05, 2016

Fiscal Stimulus Is Necessary
To Prevent A Depression?
Economist Richard Duncan* sees quantitative easing (QE) as in essence cancelling out trillions of dollars of government debt per quarter .. "Quantitative Easing cancels government debt. And we see how much UK, Japanese, European and U.S. government debt has been cancelled by the central banks so far. The amounts seem unbelievably large, but the facts are undeniable: .. If the BOJ and the ECB continue acquiring government debt at the current rate, they could acquire (and effectively cancel) all the Japanese and Euro Area government debt currently in existence in approximately 9 years. It would take the BOE 13 years. The central bank bond buying programs have driven interest rates down to the lowest levels in history. Roughly US$13 trillion worth of bonds are trading at negative yields. This QE-induced collapse in borrowing costs has set the stage for the next phase of the government policy response to the global economic crisis. Fiscal austerity is about to give way to fiscal stimulus .. Expect a large-scale, globally coordinated fiscal stimulus program to be announced in early 2017 .. If it isn’t, the global economy is in danger of collapse – because monetary policy is nearly exhausted."
LINK HERE to the commentary

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