The Debt Crisis By Uwe Lohmann
We are currently over 10 years into a time of super-low interest rates. The Fed’s choice to keep capital cheap- and most presumably later on considerably less expensive and ample, seemed well and good after the financial crisis of 2008 and 2009. It permitted organizations and shoppers to get the cash they expected to fire up the economy after the recession choked the capital markets. By Uwe Lohmann
In the next recession, an alternate policy structure will be required. This would include what may be named “going direct”: policies that put central bank cash under the control of public and private sector spenders, as opposed to depending on the incentives of lower rates. Such a system could be sorted out in a variety of ways yet would surely require closer co-ordination among financial and monetary authorities to guarantee that monetary expansion doesn’t prompt an increase in interest rates. After some time it would assist with re-establishing a progressively normal rate condition, decreasing the pressures of lower rates on savers and on the financial system. By Uwe Lohmann
