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False Beliefs and Unhappy Endings
Article

False Beliefs and Unhappy Endings

William White
OECD, 2016
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Editorial Rating

8

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  • Innovative

Recommendation

If you’re worried about another global recession, you won’t find any reassurance from economist William White, chairman of the OECD’s Economic and Development Review Committee. In this powerful article, he asserts that central bankers’ attempts to keep the economy on course are actually steering it into dangerous waters. He contends that loose monetary approaches don’t necessarily boost spending and that policy makers rely on flawed assumptions rather than on any real understanding of how the economy works. getAbstract highly recommends this intriguing report to economists, policy makers, executives and investors.

Summary

In 2016, the world may be facing an even greater risk of economic crisis than it did in 2007. The risk comes from central banks in the developed countries using easy-money policies to manipulate a system that no one understands, which could lead to outcomes that no one can foresee. Accommodative monetary policy arises from a myth that assumes consumers and businesses will respond by spending more, thus boosting aggregate demand. But economic uncertainty could discourage that spending. Alternatively, low interest rates can spur increased debt, which fuels...

About the Author

William White is the head of the OECD’s Economic Development and Review Committee.

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