Yes, and this is the reason that many still believe in the voodoo of tax cuts and supply side theories.
I think the GOP is crazy & owned by a handful of Campaign people buying politicians obsessed about going to war. But that is another debate. I think interest rates are not the solution. I see no rational for such ultra depressed rates. What happens if the economy still does not recover? What do you do? Besides it creates so many free money n tries to cover the problem without addressing the real problems plaguing the economy. This is a short cut flooding of money without a real solution which largely benefits the more richer lot, which is my problem. Also there is a tendency to put all eggs on the monetary basket. Government is taking a hands off approach. You are right it is a fiscal job largely & there needs to be an infra development which creates tremendous jobs, long term assets, GDP growth through the GDP multiplier process etc. That is one of the solutions & many more steps are required.
@Mr. S - you won't get any argument from me on what you wrote. The problem in the US is the GOP refused to go along with any stimulus spending under Obama so it was left to the Fed to drop interest rates as that was the only tool that they have. Now it looks like they will raise the rates a little bit this month and of course the stock exchange over reacted on Friday by dropping over 2%. I've kind of given up looking at the day to day movement. The companies I have investments in are all rock solid and the dividend stream that they pay is stable. We are in a different environment these day from an investor's perspective and one needs to exercise a great degree of caution.
With or without a stimulus, you probably have to cut rates quite a big to boost inflation & aggregate demand, when faced with an economic recession. That is not a debate IMO. Even if there was a fiscal stimulus (which is a must through a massive public investment programme till the economy stabilizes similar to what Keynesian economics said or FDR did), you still need a monetary stimulus & low interest rates to support borrowing & more economic activity. My objection is the level at which they have gone, to the 0% odd n the QE n the twist to manipulate liquidity to in a way try to get negative returns of sorts. 8 years have passed by in the US & look at the horrible recovery. Stock Markets I think people have to take a mid to long term view, you can't go for a day to day timing, markets worldwide have left macro sentiments & are functioning often on overly optimistic sentiments & hopes & expectations & that is not met, there is a big correction n so on...This will go on. I also think there should be an exit plan, you must have a plan after 2-3 years to gradually raise rates n so on (& you shouldn't go to 0%). Obviously without Fiscal Action by the government there will be no long term solution!
It's still way better than what has happened in Europe during this same time period. What should the Euro countries be doing?
Find ways to stimulate borrowing to small and medium firms outside of traditional banking. The problem is that the financial sector is flooded with liquidity by the ECB, but it isn't reaching the real economy and instead creates asset bubbles.
My guess would be housing and corporate assets. A lot of the money created by QE is moving straight into the stock markets and real estate without reaching the real economy. It's difficult to detect bubbles without the benefit of hindsight.
I don't think any of this is happening in the US. In fact most hedge funds are in real trouble these days as they are no longer achieving large gains. House stock was bought cheaply just following the crash during 2008-10 so that's not a bubble as lots of the property is owned to rent over here. Some corporations are purchasing back stock but a lot have money parked overseas (Apple in Ireland is the worst example) doing almost nothing as they would have to pay significant taxes to bring it back to the US. I don't know that there is a lot of money flowing to China. I certainly wouldn't put any of my investment money over there as I think they don't follow accepted accounting principles and there is a lot of corruption going on.
It isn't that important where the extra liquidity goes (although it's bound to cause trouble later), the problem is that neither demand nor production, the real economy, isn't really picking up in Europe and traditional monetary stimuli aren't working.
Since Brexit violent racism is rampant: http://www.dailymail.co.uk/news/art...n-kicked-stomach-sickening-racist-attack.html Mother-to-be lost her baby when a man kicked her in the stomach in a sickening racist attack near mosque that was firebombed by BNP thugs Woman, 34, was attacked in Co-Op car park in Bletchley, Bucks, in August Man began hurling racial abuse over queue-jumping row and followed her He then kicked her in the stomach before beating her to the ground A 40-year-old stranger who tried to intervene was left with head injuries Attack took place near mosque which has been targeted by the BNP By Steph Cockroft for MailOnline Published: 15:02 GMT, 13 September 2016 | Updated: 07:40 GMT, 14 September 2016 A pregnant mother lost her baby when a thug (pictured above) kicked her in the stomach in a sickening racist attack A pregnant mother lost her baby when a thug kicked and stamped on her stomach in a sickening racist attack near a mosque which was previously firebombed and targeted by the BNP. The 34-year-old woman was beaten to the ground in a Co-Op car park in Bletchley, Buckinghamshire, when the suspect followed her from the store after a row about queue-jumping. The suspect, who had been hurling racial abuse at the woman in the store, then continued his tirade before launching the horrific assault. Read more: http://www.dailymail.co.uk/news/art...ch-sickening-racist-attack.html#ixzz4KDr846Pz Follow us: @MailOnline on Twitter | DailyMail on Facebook
Well, these thugs donot discriminate among foreigners, the catholic Polish have been under attack too.
Portraying my comment as if it were a joke. That's what I call disgraceful. But sure, put me on ignore. That's how adults deal with differing political opinions. If there's one person who has demonstrated to be incapable of civil discussion about this subject it's you. Hope @DRB300 comes back soon. Missing his intelligent contributions on this forum.
http://www.dailymail.co.uk/news/art...KINS-experiences-hand-terror-Calais-camp.html This is happening every day around the tunnel from Calais to England. The camp with about 9000 illegal immigrants attacking trucks and crashing cars to find a way over the border. The problem has been allowed to grow for many years without anything being done about it. Exemplary for the whole immigrant crisis Europe is dealing with. http://www.dailymail.co.uk/embed/video/1329370.html
But what can you expect when this embarrassing drunk is the president of the European Commission. What a disgrace. England did the right thing in leaving.
* Every day terrorist attacks are foiled * 15.000 radicalized terror suspects are being monitored in France * Last week 3 women who left a car packed with gas cylinders next to the notre dame were arrested, one of the women stabbed a police officer during the arrest * Last week a child of 15 was arrested for planning an attack