Close X Cookies are necessary for the proper functioning of 24hGold.com. By continuing your navigation on our website, you are accepting the use of cookies.
To learn more about cookies ...
EnglishFrench
Gold & Silver Prices in

Danielle DiMartino Booth: The Fed is bedeviled by Keynes' paradox

IMG Auteur
Published : March 31st, 2017
324 words - Reading time : 0 - 1 minutes
( 0 vote, 0/5 )
Print article
  Article Comments Comment this article Rating All Articles  
0
Send
0
comment
Our Newsletter...
Category : Opinions and Analysis

The economist John Maynard Keynes warned that ultra-low interest rates would backfire on central banks seeking to spur borrowing and spending, yet they seemed surprised that the current recovery is the weakest in postwar history after cutting rates to near zero, or even below in some cases.

Keynes is credited with popularizing the "paradox of thrift," which is the economic theory that posits people tend to save more during recessions as rates fall to offset the income their savings is not generating. Of course it is the case that when you save more, you spend less. Since the U.S. economy is fueled by consumption, it also stands to reason that growth suffers as a result.

It's been two years since Swiss Re produced a report that calculated U.S. savers had foregone some $470 billion in interest income. The analysis was based on what rates would have been had the Federal Reserve followed the Taylor Rule, which would have put rates, then at zero, at 1.7 percent.

Even as the Fed has begun to raise rates, it is clear that hundreds of billions of dollars have been squirreled away as savers play defense to counteract the Fed's ultraloose monetary policy. Some $11.7 trillion is sitting in bank deposits, up from $7.23 trillion at the start of 2009 shortly after the Fed cut rates to near zero, central bank data show.

Although the Swiss Re report acknowledged that higher home prices and stock market values somewhat offset what households missed out on in earned in interest, the caveat was that the bulk of the wealth created via those two avenues flowed to the wealthiest. Two years on, the skew is, if anything, more acute. Even as the prices of stocks and luxury homes have scaled new heights, for the vast majority of Americans, so has the cost to buy or rent a home and that of healthcare. ...

... For the remainder of the commentary:

https://www.bloomberg.com/view/articles/2017-...s-bedeviled-...

Data and Statistics for these countries : Georgia | All
Gold and Silver Prices for these countries : Georgia | All
<< Previous article
Rate : Average note :0 (0 vote)
>> Next article
Chris Powell is the secretary of the Gold Anti-Trust Action Committee (GATA) which has been organized to advocate and undertake litigation against illegal collusion to control the price and supply of gold and related financial securities.
WebsiteSubscribe to his services
Comment this article
>Follow all commentairies
You must be logged in to comment an article8000 characters max.
Log in or Sign up
Latest comment posted for this article
Be the first to comment
Add your comment
Top articles
Latest Comments
The parable of the cards
08:14dom1971
Please let me take this a step further if I may... because I see an opportunity to highlight a particular concern of mine. Let us ignore f...
Debate Over Electric Trucks: Let’s Get It On
25 AprJerry82
Thanks Mish, this was a very insightful and thought provoking piece. I've often heard concerns about the weight of these new electric trucks and th...
No, The Junior Mining Stocks Are Not About To Implode - Dave Kranzler
25 AprJerry821
Thank you Dave for this excellent article. I agree with your well thought out critiques that point to junior miners being just fine. Relying on tha...
Gold Bullion Erases $10 Bounce Despite French Election, N.Korea Ris...
25 AprJerry82
I don't know how much I'd trust the listed GLD holdings. I always found GLD's structure to be a bit strange. They so famously claim that they are 1...
The Story of Gold Money, Past, Present and Future, by Edwin Walter ...
18 AprJerry82
Thank you for this very thought provoking piece Nathan. I have not read any literature from Edwin Walter Kemmerer before but I am inclined to pick ...
Gold Prices Slip $10 After Breaking Downtrend as UK's May Seeks Bre...
18 AprSam Maher3
"That left the GLD gold ETF needing a 2017 high of 849 tonnes in bullion backing." I frequently see you make these claims on GLD's holding...
Bombs Away!
17 Aprprljr-1
James tribe owns trump.
Krunch Time for Korean Krackpot Despot, Kim Jong-Un: Missile Crisis...
17 Aprprljr1
Unfortunately the world is not run by Christians, well except for the useful idiot ones.
Most commented articlesFavoritesMore...
World PM Newsflow
ALL
GOLD
SILVER
PGM & DIAMONDS
OIL & GAS
OTHER METALS