asterisk2a + fiscal + behaviour + literacy   1

The Unseen Consequences of Zero-Interest-Rate Policy
distortion of asset allocation (mal-investment, investment in less productive areas for the economy) and risk appetite by pressure - hunt for yield. keeping zombie banks, consumers, and corporate alive by enabeling to rolling over their debt and even go further out on the time axis (long-term bonds/increase overall maturity of your debt - when it has to be repaid), incentive to buy on cheap credit, instead savings, delay of fiscal, economic, political reform by the given artificial time window (see lack of industrial, manufacturing, education, STEM policy/vision of UK) >> and false impression that austerity works great! // and as Richard Koo in one of his recent presentations (for his new book) said - Fed does not know how Taper will unfold, especially the problematic thing of long-dated bonds on their books and how to get them into the market.
ZIRP  NIRP  QE  Taper  Richard  Koo  economic  history  academia  academics  fiscal  policy  monetary  policy  recovery  GFC  hunt  for  yield  asset  allocation  asset  bubble  2015  distortion  productive  investment  financial  repression  financial  literacy  economic  damage  Group  behaviour  behavioral  economics  savings  rate  balance  sheet  recession  deleveraging  savings  glut  structural  deficit  structural  imbalance  Impediments  faultlines  austerity  Makers  Career  Politicians  No  Representation  policy  folly  policy  error  unintended  consequences  unknown  unkown  UK  USA  Europe  ECB  Fed  Abenomics  lost  decade  lost  generation  BOE  liquidity  trap 
august 2015 by asterisk2a

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