Lessons for Central Banks. Secular Stagnation and Fiscal Multipliers
“And then the harder they come, the harder they fall, one and all”
—Jimmy Cliff
We have analyzed many key elements of the failure of the central bank trap.
Let us summarize a few:
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Creating bubbles that need to be maintained afterward to avoid a financial crisis
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Trying to solve a problem of debt with more debt
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Assuming investment and growth are weak because of a demand problem, not a structural issue
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Generating collateral damages in emerging markets and commodities
In the recent times, we have witnessed another, and worrying, side effect. The reaction from voters against the establishment becomes more aggressive as citizens do perceive that all those massive ...
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