Central Bankers Admit that Central Banks Have Failed to Fix the Economy

Wednesday, March 2, 2016
By Paul Martin

WashingtonsBlog.com
March 1, 2016

Between 2008 and 2015, central banks pretended that they had fixed the economy.

In 2016, they’re starting to admit that they haven’t fixed much of anything.

The current head of the Bank of England (Mark Carney) said last week:

The global economy risks becoming trapped in a low growth, low inflation, low interest rate equilibrium. For the past seven years, growth has serially disappointed—sometimes spectacularly, as in the depths of the global financial and euro crises; more often than not grindingly as past debts weigh on activity ….

This underperformance is principally the product of weaker potential supply growth in virtually all G20 economies. It is a reminder that demand stimulus on its own can do little to counteract longer-term forces of demographic change [background] and productivity growth.

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In most advanced economies, difficult structural reforms have been deferred [true, indeed]. In parallel, in a number of emerging market economies, the post-crisis period was marked by credit booms reinforced by foreign capital inflows [including from central banks themselves], which are now brutally reversing….

The Rest…HERE

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