Sunday, September 25, 2016

Nobel prize winner: The cheap money of Central banks does not help the economy –

in the opinion of the economic Nobel prize winner Edward Prescott, the continued global glut of cheap money fails to hit the target, the growth on a broad Front more power. Only the group of Wealthy benefits.

The policy of massive bond purchases, the money supply increases, more and more, and the low interest rate strategy of the most powerful Central banks should have no major impact on the real economy, said the American Economist of the “world on Sunday”. The Central banks that are supposed to act neutrally, has been under increasing political pressure.

governments pay off debt “through the back door”

It was proved “that monetary policy has no lasting effects on growth and employment,” said the 2004 Nobel prize-winning scientists. A number of Economists, this Thesis is represented by the “neutrality” of money.

proponents of the trillion-the creation of money argue that such low interest rates spur lending, and thus indirectly investment and consumption. However, this effect is not really visible.

Prescott stressed that governments have used the Central banks and the low Interest rate also, for example, to the repayment of debt through the back door, because the interest cost of public budgets were always low. “The bloated balance sheet of the US Central Bank is a sign of the hypocrisy of the financial politicians that passed your debt, simply on the books of the Central Bank”, criticised the Economist.

policy is responsible, not Central banks

For the development of a national economy, it’ll be on taxes and productivity, said Prescott. Both of these lie in the responsibility of the policy.

Also, the renowned monetary theorist Stephen Cecchetti attribute a large part of the problems, especially the governments of the countries. “The Central banks have been overloaded by the failure of the fiscal policy with responsibility”, – quotes the “world” of the Economists.

in Particular, countries with sufficient fiscal room should do more. “This would relieve the Central banks to always do more.”

Hope for the job market

The US Central Bank, the Fed keeps up to date on their cheap money policy, higher interest rates were at the earliest for the end of the year. The monetary authorities of Japan and the European Central Bank (ECB) to an extremely loose monetary policy.

The Bundesbank had recently warned of rapid Judgments. “In addition to asset prices, monetary policy measures have, in General, and the special measures of the last years in Particular also to the economic development, employment, overall economic uncertainty, and the confidence of the market participants,” it said in its monthly report for September. If the situation is improving in the labour market, a verb, is of benefit to the especially poorer households.

Federal citizens have to spend your money

Today, benefit from the cheap money, especially shareholders. The money of many Rich is often for the greater part in the form of shares and other securities. You benefit from the unprecedented money by the major Central banks in the world, which drives the prices in the financial markets glut.

The majority of Germans, despite mini interest rates is still always a big bow to share. According to calculations by Allianz AG, the German people have not given away in the last four years, a three-digit billion sum “is”, because they dared to enter the stock exchange.

Would have put the Germans in the last four years, only 30 percent of their assets in Bank deposits (instead of 40 percent) and the remaining 10 percent half and half to stocks and mutual funds distributed, you could have been around 200 billion euros.

Classic savings products preferred – hardly of interest

The German benchmark index, the Dax about to put since November 2011, to well over 60 percent. About nine million people had, according to the German share Institute in the past year, the shares and/or shares in a Fund. That was the highest level since 2012. In times of stock market boom around the turn of the Millennium, the number of shares the investor was in the Federal Republic, however, in the case of nearly 13 million.

The majority of the more stock exchange in scouring the German sets, however, especially to interest-bearing traditional banking deposits (just under 40 percent of gross financial assets) and insurance and pensions (37 per cent). Save entpuppe therefore currently mainly used as a cash Parking, and not as a to Invest.

money asset is growing more slowly

the effect of The ultra-loose monetary policy on financial markets, however, seems gradually to subside. The growth of the financial assets weakened in the past year in the world. The gross financial assets of private households in 53 countries rose by only 4.9 per cent to a record level of 155 billion Euro. In the three years previously it had been a year in average approximately nine percent.

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