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No more ammunition to help ailing economy. Nowhere to go but down.

Discussion in 'Economics, Business, and Taxes' started by Sgt Staples, May 13, 2015.

  1. Sgt Staples

    Sgt Staples Mayor

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    HSBC WARNS: The world economy faces a 'titanic problem'


    Whereas previous recoveries have enabled monetary and fiscal policymakers to replenish their ammunition, this recovery — both in the US and elsewhere — has been distinguished by a persistent munitions shortage. This is a major problem. In all recessions since the 1970s, the US Fed funds rate has fallen by a minimum of 5 percentage points. That kind of traditional stimulus is now completely ruled out."
    King notes that this far into the recovery, there's a lack of "traditional policy ammunition." For instance, Treasury yields have not risen, the budget deficit is not falling, and welfare payments are still on the rise.



    http://www.businessinsider.com/hsbcs-stephen-king-on-the-world-economy-2015-5
     
    • Informative Informative x 1
  2. Woolleybugger

    Woolleybugger Mayor

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    when interest rates fall to low level, the Fed has a lot fewer options which is why monetary policy should be complimented with fiscal policy remedies. Classic Keynes baby...
     
  3. Lukey

    Lukey Senator

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    Classic Keynes, indeed:

    Screen Shot 2015-04-29 at 9.20.39 AM.

    Been there, done that. Didn't work either...
     

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