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More Thoughts on the Economy Part VII

By Andy Shaw | January 25, 2010

Originally Posted 13th January 2009

Deflation – Recession/(Depression) Ends When?

“In troubled times, investors tend to withdraw from foreign markets to concentrate on the home scene they know best.”

The Fed & the BoE worry that in deflation, offsetting monetary policy is difficult since its target rate has to stop declining when it reaches zero. Of course, they have other tools such as quantitative easing which I discussed earlier. Nevertheless, all these measures amount to trying to lead a horse to water, but do not actually fix the problem as the horse may not drink.

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Topics: Government, The Economy | Comments Off

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