A Quote by Raghuram Rajan
Endorsing unconventional monetary policies unquestioningly is tantamount to saying that it is acceptable to distort asset prices if there are other domestic constraints on growth.
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To ensure stable and sustainable economic growth, world leaders must re-examine the international rules of the monetary game, with advanced and emerging economies alike adopting more mutually beneficial monetary policies.
Initially, QE contributed to a pretty significant increase in inequality. It raised asset prices, which are owned primarily by the wealthy, while having relatively small if any positive impacts on bank lending, employment, wages or economic growth, so ordinary people haven't had much help. By the third round of QE in 2012-2014, the effects had likely muted quite a bit. There were probably not big impacts on asset prices from QE and the positive effects on employment growth might have strengthened somewhat.
In 1980, evangelicals overwhelmingly elected a candidate who was a known womanizer when he was in Hollywood. He would be the first divorced president in U.S. history. His name was Ronald Reagan. And when evangelicals voted for Reagan, they weren't endorsing womanizing. They weren't endorsing divorce. They were endorsing Reagan's policies.
The fallacy of monetary policy in the U.S. is to believe this money will go to the man on the street. It won't. It goes to the Mayfair economy of the well-to-do people and boosts asset prices of Warhols... Very happy. Very good for the Fed. Congratulations, Mr. Bernanke.
As financial markets continue to broaden and deepen, the behavior of asset prices will play an important role in the formulation of monetary policy going forward, perhaps a more important role than in the past.
Inflation is certainly low and stable and, measured in unemployment and labour-market slack, the economy has made a lot of progress. The pace of growth is disappointingly slow, mostly because productivity growth has been very slow, which is not really something amenable to monetary policy. It comes from changes in technology, changes in worker skills and a variety of other things, but not monetary policy, in particular.
There is no doubt that the Fed's large-scale asset purchases have caused major increases in a number of asset prices in the economy. This is especially true of mortgage backed securities and corporate bonds, and quite possibly of equities as well. For those people and institutions holding those things, the run up in prices has been a wealth bonanza.
'Inequality' has become the political theme/slogan of our time in both Europe and the U.S., yet political leaders do not even bother to consider that their own policies, which put the entire burden on central bankers to print money and drive up stock, bond and other asset prices, are actually exacerbating income and wealth disparity.
The real essence of any marriage that has struggled, however unsuccessfully, towards happiness, lies in the growth of a wordless understanding that what is acceptable to one partner will be acceptable to the other.
Of all the things that can have an effect on your future, I believe personal growth is the greatest. We can talk about sales growth, profit growth, asset growth, but all of this probably will not happen without personal growth.
Domestic inflation reflects domestic monetary policy.
John McCain is now openly endorsing the policies of the Bush-Cheney White House and promising to actually continue the same policies over again? Hey, I believe in recycling but that's ridiculous.
Interest rates are to asset prices what gravity is to the apple. When there are low interest rates, there is a very low gravitational pull on asset prices.
Now, McDonald's is a very good indicator of the global economy. If McDonald's doesn't increase its sales, it tells you that the monetary policies have largely failed in the sense that prices are going up more than disposable income, and so people have less purchasing power.
My advice would be, as you consider fiscal policies, to keep in mind and look carefully at the impact those policies are likely to have on the economy's productive capacity, on productivity growth, and to the maximum extent possible, choose policies that would improve that long-run growth and productivity outlook.
Monetary conditions exert an enormous influence on stock prices. Indeed, the monetary climate - primarily the trend in interest rates and Federal Reserve policy - is the dominant factor in determining the stock market's major direction.
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