| 来源类型 | Article |
| 规范类型 | 评论 |
| No more Fed follies | |
| Desmond Lachman; Christine Rosen | |
| 发表日期 | 2016-04-20 |
| 出版年 | 2016 |
| 语种 | 英语 |
| 摘要 | At a time that the world is beset by an unusually large confluence of major economic risks, it would not seem premature to consider what the appropriate policy response would be to any petering out of the US economic recovery. Since a triggering of any of those global risks has the potential to roil global financial markets and to tip the US economy back into recession. To paraphrase Shakespeare, when global economic risks come, they seem to come not as single spies but in battalions. In Europe, these presently include the risk of Britain exiting Europe following its referendum late this June, Greece being forced out of the Euro for failure to comply with the terms of its IMF-EU loan agreement, and Italy succumbing to a banking crisis as a result of an inordinate amount of non-performing loans. Outside of Europe, these risks include a deepening of the political and economic crisis currently engulfing Brazil, difficulties associated with China’s efforts to move its economy away from an investment and export-led growth model, and a heavily indebted Japanese public sector finding that the Japanese economy has again lapsed into deflation. Two factors make a triggering of any of these risks all the more serious at this time. The first is that the world is presently drowning in debt. Indeed, as a result of the world’s major central banks for many years having encouraged markets to take on more risk by expanding their own balance sheets in an unprecedented manner, the level of overall public and private sector indebtedness in the global economy is very much higher today than it was in 2008 at the start of the Great Economic Recession. Particularly troublesome is the very high level of corporate debt in the emerging market economies and the still very high public sector debt levels in the European economic periphery. The second factor is the fact that all too many of the world’s major central banks, including most notably the European Central Bank and the Bank of Japan, have been engaged in highly aggressive unorthodox monetary policies aimed at cheapening their currencies to gain competitive advantage. This has to heighten the risk that should the world economic recovery indeed falter, the world could be tipped into an outright currency war. In assessing what the appropriate policy response might be to any faltering of the US and global economic recoveries, it is well to reflect upon the fact that the Federal Reserve’s past policies of aggressive quantitative easing have set up the stage for considerable global financial market turbulence. They have done so by artificially boosting asset prices and by encouraging borrowing at artificially low interest rates that do not reflect the likelihood of the borrower eventually defaulting on the loan. They have also contributed to a super international commodity price-cycle that is now in the process of busting as well as to major economic imbalances in a number of key emerging market economies. This would seem to make the financial markets particularly vulnerable to a major setback as the process of normalizing interest rates continues. Considering the important long-run political and economic costs that aggressive quantitative easing policies will all too likely have entailed, it would not seem too early for the Federal Reserve to consider alternative approaches to stimulating the U.S. economy when it next falters. Among the ideas that warrant serious attention must be Milton Friedman’s famous idea of “helicopter money”, whereby the Federal Reserve would finance a government check to all the country’s citizens. Such an approach would more than likely succeed in stimulating the US economy in a manner where all citizens rather than only a portion benefit. In addition, it would spare us from the creation once again of major distortions in both domestic and global financial markets that would only set up the stage for the next global financial crisis. |
| 主题 | Economics ; International Economics ; Monetary Economics |
| 标签 | emerging market economies ; Federal Reserve ; Fiscal policy ; quantitative easing |
| URL | https://www.aei.org/articles/no-more-fed-follies/ |
| 来源智库 | American Enterprise Institute (United States) |
| 资源类型 | 智库出版物 |
| 条目标识符 | http://119.78.100.153/handle/2XGU8XDN/260431 |
| 推荐引用方式 GB/T 7714 | Desmond Lachman,Christine Rosen. No more Fed follies. 2016. |
| 条目包含的文件 | 条目无相关文件。 | |||||
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