This piece was reprinted by OpEd News with permission or license. It may not be reproduced in any form without permission or license from the source.
In the late 1960s, inflation was 2%. Unemployment was 4%. Who could have imagined what lay ahead? It followe failed Fed policy. Real short rates remained negative far too long.
A flawed Phillips Curve policy was pursued. Conventional wisdom believed higher inflation would stimulate growth and decrease unemployment.
Be careful for what you wish for? It may not turn out like you expect. For 12 years, America got four recessions. No one, including the Fed, saw it coming. It missed the last one in late 2007.
In summer 2008, it suggested raising rates. So did the ECB. Its easing policy is more aggressive now than at the depths of the early 2009 crisis.
Fed policies assure missteps. Historical evidence shows increasing inflation produces adverse macro results. This time's no different. It's true for America, Europe and Japan. Bad endings look certain. They'll arrive in the fullness of time.
How long can QE and ZIRP (zero interest rate policy) continue while budget deficits add over $1 trillion to the national debt annually?
Fed policy can't stop now. Eventually, what can't go on forever, won't. It's not hard imagining how things will end. It'll be with a bang, not a whimper.
Global economies everywhere will be impacted. They may be like never before. Recovery will be slow and painful. People who know best say so.
Next Page 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8
(Note: You can view every article as one long page if you sign up as an Advocate Member, or higher).