Friday, June 10, 2016

Fed people now advocating for ZIRP and NIRP


Evans down for remaining at 0.X % and MMT top-ender darling Kocherlakota down for actual negative rates:





7 comments:

Tyler Healey said...

I wonder if they'll ever realize that ZIRP and NIRP are deflationary.

Bob said...

A clenched fist says this guy isn't about to back down from his beliefs.

Anti said...

The MMT perspective on low and negative interest rates reminds me of neo-Fisherism. That is, that low rates can actually cause deflation. It's easy to find examples in which this concept simply doesn't hold. Take the ECB's interest rate increase in 2011, for example.

MRW said...

What does “top-ender” mean?

Bob said...

For every bottom feeder there is a top-ender. The difference is prestige.

Kristjan said...

"The MMT perspective on low and negative interest rates reminds me of neo-Fisherism. That is, that low rates can actually cause deflation. It's easy to find examples in which this concept simply doesn't hold. Take the ECB's interest rate increase in 2011, for example."

Yes, you can always say this concept doesn't hold. Don't take anything else into consideration when you present the 2011 ECB rate hike. But take everything else into consideration when you need to show that lowering interest rate is inflationary. Good for you, it is very easy to show.

Ryan Harris said...

NIRP is one solution to make the current trade system balance over the long term. It's not the best, but it works, I think. I need to play with a spreadsheet for a few hours to get rid of the last few cobwebs. But if current account surplus/ mercantile /exporter nations create negative rates, they can endlessly extend credit to deficit nations. Each year, interest rates make a small fiscal transfer of interest to cancel the debt of the debtor nations. Germany can keep their factories, Greece can borrow Euros, and keep the goods for free. The UK can pay in Euros to get a free ride, rather than paying in HM pounds which would devalue and cause German factories to become uncompetitive and then encourage DB to take wild risks. The cost of mercantile policy is shifted onto the Germans, who work for free in the long run as their financial proceeds evaporate.