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Not another ZIRP topic
Posted on 2/16/16 at 12:17 pm
Posted on 2/16/16 at 12:17 pm
ValueWalk
Thought this short article pretty much sums up my thoughts on this whole issue. Economic growth is created from both fiscal and monetary policy. It's time to turn to the former.
quote:
Negative interest rates will result in “escalating the currency war” that will usher in economic “mutually assured destruction,” evoking a horrific nuclear or chemical specter.
quote:
“Negative rates don’t stimulate beyond currency devaluation,” the report noted, pointing to the benign method in which central banks engineer a tipping point, a chain reaction. “But negative rates set by larger CBs produce no benefit in a soft global economy because they are countered. If Euro plunges, then others from GBP to RMB will too, and then if a strong dollar breaks the US economy the whole world will suffer. This spiral risk destabilizes FX markets and price setting in other markets and threatens saver and financial system health.”
quote:
“We believe the Fed should signal its ability and willingness if necessary to support bipartisan fiscal stimulus balanced with spending and tax cuts before it would open the door to negative interest rates,” the report advised.
Thought this short article pretty much sums up my thoughts on this whole issue. Economic growth is created from both fiscal and monetary policy. It's time to turn to the former.
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