Alternet - [Economist Paul] Krugman contends that as we enter the new year, we are uniquely ill-prepared for any kind of destabilizing event, be it a nuclear standoff with North Korea, a second Iranian revolution that disrupts oil supplies, or a tech stock bubble bursting like it did in 1999. That's because interest rates are already historically low, and there's little central bankers can do to stimulate the economy should we find ourselves in a downturn.
"That’s not a critique of central bankers. All indications are that for whatever reason—probably low population growth and weak productivity performance—our economies need those low, low rates to achieve anything like full employment," he writes. "And this in turn means that it would be a terrible, recession-creating mistake to 'normalize' rates by raising them to historical levels."
Krugman's larger point is that our return to normalcy since 2008 remains incredibly fragile, and that "sooner or later" something will go wrong that disrupts the country's steady growth. When that does, we'll be relying on the likes of Donald Trump and Steve Mnuchin to guide us through the crisis.
1 comment:
I constantly remind folks that the era of economic growth is dead due to a variety of factors including ecological collapse, but they insist i am wrong, though never can tell us why. Until the US and the wstern world figures out that no growth is the new normal they will continue to make stupid policy decisions on the economy. Krugman just reinforced this.
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