Azizonomics
A Visual Representation of the Zero Bound
John Aziz
The monetarists hold that this is only because negative real rates are ruled out in the existing system. If it were possible to charge for reserves instead of paying interest on them, then you would see how they are right. Sure could fool me looking that that chart.
A Visual Representation of the Zero Bound
John Aziz
The monetarists hold that this is only because negative real rates are ruled out in the existing system. If it were possible to charge for reserves instead of paying interest on them, then you would see how they are right. Sure could fool me looking that that chart.
6 comments:
Reverse hot potato? Lower interest rates are associated with higher saving rates. Someone tell Nick Rowe...
"If it were possible" to make illogic not follow imposed reality .... then we could insiste that any old idea COULD work ... in theory.
Wasn't that approach to economics adequately discussed in "Alice in Blunderland?" You have to wonder.
We're back to a familiar divergence in cultural stories.
Aristocrats propose one story, and insist that all live it.
The 99%, try as they might to believe the story, are forced by circumstance to act out operations that follow no consistent mapping the the Aristocrats story.
Stories, stories everywhere, and nary a real option to allowably explore.
The "Strong Man" theory of cultural leadership is misnamed. The "Wrong Man" moniker fits better. Just another tangent plank to walk off of, blindfolded.
The monetarists hold that this is only because negative real rates are ruled out in the existing system.
Only negative *nominal* rates are ruled out.
Yes, thanks, Vimothy. My bad.
We now have negative real rates and have for some time. According to theory this is supposed to result in money savings flowing into acquisition of non-financial assets with at least some increase in investment, which has not happened. It has influenced the price of commodities and PM's though.
The New Keynesian idea is basically that, because of the zero lower bound on *nominal* rates (which cannot go below zero), the *real* rate can be stuck at an inefficiently high level.
Rodney Sullivan, CFA, Negative Real Interest Rates: The Conundrum for Investment and Spending Policies
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