Martin Wolf: Negative rates are not the fault of central banks
The world economy is suffering from a glut of savings relative to investment opportunities.
Why does such a savings glut exist? That is the important question.
Given its current account surplus of almost 9 per cent of gross domestic product — that is, savings far in excess of what it absorbs domestically, even at ultra-low interest rates — Germany might ask what its domestic interest rate would be if it had to absorb this glut at home.
Unfortunately, the rest of the world cannot absorb these savings easily either.
Fiscal policy should have come into play more aggressively.
Indeed, it is hard to understand the obsession with limiting public debt when it is quite as cheap as it is today.
Martin Wolf, FT 12 April 2016
Why does such a savings glut exist? That is the important question.
Given its current account surplus of almost 9 per cent of gross domestic product — that is, savings far in excess of what it absorbs domestically, even at ultra-low interest rates — Germany might ask what its domestic interest rate would be if it had to absorb this glut at home.
Unfortunately, the rest of the world cannot absorb these savings easily either.
Fiscal policy should have come into play more aggressively.
Indeed, it is hard to understand the obsession with limiting public debt when it is quite as cheap as it is today.
Martin Wolf, FT 12 April 2016
- Jag tycker det är skriande uppenbart att räntan världen över är för låg och att en större del av stimulanserna borde ske via finanspolitiken.
Det skrev jag på min blogg första gången den 5 december 2009.
Nu skriver jag det igen.
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