commissioner.org
| Source | Louis Proyect |
| Date | 14/10/14/15:59 |
| www.ft.com
SUPPOSE WE THEN learned that the yield on 10-year government bonds was just 2.6 per cent in the US, 2.4 per cent in the UK, 1 per cent in Germany and 0.6 per cent in Japan. One would have to forget the notion of high inflation; we would suggest instead that these economies had been allowed to fall into a deep, prolonged depression. If we were told that central banks had also implemented huge expansions of their balance sheets, confidence in this hypothesis would strengthen. Why else would policy makers have been so unorthodox? Up to a point, we would also have been right. In the US, UK and the eurozone, output has fallen far below what virtually everybody expected eight years ago. The same is true of Japan, though the trend in question ended two and a half decades ago. Yet, contrary to what we might also have expected, we do not observe accelerating deflation: the latest data on annual consumer price inflation are 1.7 per cent in the US, 1.5 per cent in the UK and 0.3 per cent in the eurozone. None of these figures, even the last, are all that distant from announced targets. When we look at the high-income economies in this way, we must recognise that they are in a truly extraordinary state. The best way to describe it is as a managed depression: aggressive monetary policies have been sufficient to halt accelerating deflation, but they have been insufficient to produce a strong expansion... |
Copyright (c) 1998, Joongpil Cho