It’s amazing how little he grasps

Governments were very keen on monetary policy from about 1980 onwards, but in the last decade in very many countries in the world interest rates that governments can influence have been very low, and that means the policy is now largely ineffective in many jurisdictions.

No, speed and acceleration.

It means that further lowering of interest rates isn’t going to be all that effective at doing something. But if you think that monetary policy is currently ineffective just think of the alternative. What would a reversion to 5% real interest rates do to the economy? Hmm? Ah, so monetary policy is currently effective then, isn’t it?

1 thought on “It’s amazing how little he grasps”

  1. Go on Tim. Do some macro. Show the money supply from 2008, relate it to GDP and draw a conclusion. I think the money has all gone into concrete blocks in Docklands and Lambeth. If GDP to growth in monetary aggregates is a simulacrum of an equation where only one term is known to any extent (pt=mv) then surely you can explain where has the money gone?

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