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False Beliefs and Unhappy Endings
Article

False Beliefs and Unhappy Endings

OECD, 2016

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Editorial Rating

8

Qualities

  • 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.

Take-Aways

  • Central banks in the developed countries are 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 assumes consumers and businesses will spend more and boost demand. But uncertainty could discourage that spending.
  • Low interest rates can spur increased debt and push asset prices to artificial heights.

About the Author

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


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