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Durably stabilizing today’s markets is important, especially for a system that has already assumed too much financial risk. It requires a policy handoff instigated by more responsible behavior on the part of politicians on both sides of the Atlantic – one that undertakes the much-needed transition from over-reliance on central banks to a more comprehensive policy approach that deals with the economy’s trifecta of structural, demand, and debt impediments (and does so in the context of greater global policy coordination).
Should this handoff occur, its beneficial impact in terms of delivering inclusive growth and genuine global stability would be turbocharged by the productive deployment of cash sitting on companies’ balance sheets, and by exciting technological innovations that began as firm/sector specific but are now having economy-wide effects. If the handoff fails, the financial volatility experienced earlier this year will not only return; it could also turn out to have been a prologue for a notable risk of recession, greater inequality, and enduring financial instability.
Read more at https://www.project-syndicate.org/c...hamed-a--el-erian-2016-03#yhbI1y1B5UdYzXER.99
Should this handoff occur, its beneficial impact in terms of delivering inclusive growth and genuine global stability would be turbocharged by the productive deployment of cash sitting on companies’ balance sheets, and by exciting technological innovations that began as firm/sector specific but are now having economy-wide effects. If the handoff fails, the financial volatility experienced earlier this year will not only return; it could also turn out to have been a prologue for a notable risk of recession, greater inequality, and enduring financial instability.
Read more at https://www.project-syndicate.org/c...hamed-a--el-erian-2016-03#yhbI1y1B5UdYzXER.99