Negative Shocks, Deeper Recessions and the Great Threat to Financial Stability

from King World News

As the world awaits the next round of monetary madness, here is a dire warning about negative shocks, deeper recession and the great threat to financial stability.

Here is what Peter Boockvar wrote today as the world awaits the next round of monetary madness: In a speech titled “Why are interest rates so low? Causes and implications”, Stanley Fischer is premising the speech on “why we should be concerned about such low interest rates.” He raises the possible explanations for why and risks that it entails. Firstly, “the economy’s long run growth prospects are dim.” Secondly, “low interest rates make the economy more vulnerable to adverse shocks that can put it in a recession” which “could therefore lead to longer and deeper recessions when the economy is hit by negative shocks.” Thirdly, “low interest rates may also threaten financial stability as some investors reach for yield and compressed net interest margins make it harder for some financial institutions to build up capital buffers.”…

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