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Even after all of this quantitative easing ? Makes me wonder what will happen once it's stopped. EDIT: I'm also talkin about the extremely low interest rates o

Even after all of this quantitative easing ? Makes me wonder what will happen once it's stopped. EDIT: I'm also talkin about the extremely low interest rates or basically ZIRP. There's really not much more the FED can do. But if this means that the era of zero interest rates is here to stay for longer then the party in Silicon valley is about to get even wilder. I'd like the opinion of some people more knowledgeable about economics as to why recovery is taking so long. It's already 7 years since the crash. How long could it potentially take ? It's not like this state of affairs can last forever can it?

littletimmy 11y ago
Secular stagnation. Basically, what happened to Japan in the previous decades is now going to happen to much of the developed world. A prolonged period of no growth with no monetary policy tools to help solve the problem, and no political will to implement a more active fiscal policy.
- fweespeech 11y ago
  Pretty much. Its not possible to recover from in the near term because the only reason it hasn't been worse is the fact we've been having the FED use every policy tool it could think of. http://www.economist.com/blogs/buttonwood/2014/11/secular-stagnation http://www.economist.com/blogs/buttonwood/2014/11/secular-st... http://www.independent.co.uk/news/business/news/imf-fears-global-economy-is-suffering-secular-stagnation-10161154.html http://www.independent.co.uk/news/business/news/imf-fears-gl...
  - toomuchtodo 11y ago
    Perhaps its time we admit that growth isn't a requirement to an ever-incrasing quality of life? And investigate the transition to steady state economies? Who am I kidding, that'll never happen.
    - fweespeech 11y ago
      An ever increasing quality of life, in the western world, honestly isn't needed. The Quality of Life for the Middle Class in the West is good enough. The problem is, to bring everyone up to the 2015 standard of the West's middle class requires a helluva alot of growth.
      - scarmig 11y ago
        From today: India’s Economic Growth Hits Four-Year High http://www.wsj.com/articles/indias-economic-growth-hits-four-year-high-1432902911 http://www.wsj.com/articles/indias-economic-growth-hits-four... "India’s output growth accelerated to 7.5% last quarter, putting it ahead of China as the world’s fastest-growing large economy." To be fair, some of the data presented is faked, but it's in the ballpark. It'd be good if India and the developing world were all growing faster, but they're still coming along at a nice clip.
        fweespeech 11y ago
        Yeah, but its also the impoverished and "lower class" in the US and the rest of the West. You need $30-$40k [depending on where you live in the US] per Adult to be middle class.
        known 11y ago
        Little better than Ethiopia; http://www.dailymail.co.uk/indiahome/indianews/article-2480424/VISUAL-EDIT-India-little-better-Ethiopia.html http://www.dailymail.co.uk/indiahome/indianews/article-24804...
    - thewarrior 11y ago
      But no growth will make inequality much harder to digest. Noone minds inequality as much , as long as he is assured that his lot will improve some day. Take that away and it's only a matter of time before things boil over.
    - randomname2 11y ago
      Well, just saying, but "no growth" hasn't really been working out for Greece lately.
- eli_gottlieb 11y ago
  I do have to ask: who says there's no political will? Japan is unusual in having an extremely stagnant, consensus-based, establishment politics. In the Western world, labor movements against the current establishment have been gaining steam and local victories like they haven't done in decades. If political will stands in the way of getting out of the stagnation, it will be moved or removed.
  - littletimmy 11y ago
    There is no political will in the sense that people in power don't have the will, and the people with will don't have power. I'm all for optimism, but I doubt we're going to see a sudden reversal of the oligarchy and power restored to the people anytime soon. I support labor movements, but I doubt they can supplant the lobbying of the corporations. If there will be any change at all, it will come about when corporate leaders put pressure on the government.
    - deciplex 11y ago
      He does have a point, though: Japan is probably (and hopefully) an anomaly in how they dealt with the crisis. It's one of the last places on Earth where Confucian ethics still hold a great deal of sway at all levels of society (for now, at least). And that ideology has its strong points, but it is hardly compatible with democracy. It is probably not a good example for how most of the West will deal with the same problem, though whether we do a better job of it remains to be seen.
izend 11y ago
Purchases were halted on 29 October 2014[63] after accumulating $4.5 trillion in assets
- randomname2 11y ago
  That's counting only US asset purchases though. Other central banks did another $17.5T (and still ongoing).
randomname2 11y ago
Well it took just $22 trillion in global central bank asset purchases to get a -0.7% US GDP print...
- toomuchtodo 11y ago
  If I was drinking coffee, I'd spit it out on my keyboard right about now.
tangled 11y ago
> one guest left a New York restaurant with the impression Bernanke, 60, does not expect the federal funds rate, the Fed's main benchmark interest rate, to rise back to its long-term average of around 4 percent in Bernanke's lifetime, one source who had spoken to the guest said. http://mobile.reuters.com/article/idUSBREA4F0OG20140516 http://mobile.reuters.com/article/idUSBREA4F0OG20140516
james1071 11y ago
Debt overhang-takes a long time to work through.
- mkempe 11y ago
  The endpoint of low-interest driven inflation by central banks is always a disaster. How long it takes to cure merely depends on how long it takes to end central banking and its arbitrary powers. Whatever capital was destroyed through government waste and general consumption will take time to rebuild. The sooner we're free from the scourge of central banking, the sooner we can all re-start growing and thriving.
  - the_why_of_y 11y ago
    We have exceptionally low interest rates in USA and EU for 7 years now, but where is the inflation?
    - mkempe 11y ago
      For evidence look at real estate, stock market, and food (e.g. eggs [1]). Not the government-manipulated "consumer price index" numbers, but the actual, raw prices. [1] https://ycharts.com/indicators/us_eggs_price_receivedyearly https://ycharts.com/indicators/us_eggs_price_receivedyearly
      - the_why_of_y 11y ago
        The stock market? Securities are not consumer goods, why should they be counted in an inflation metric? Food (and energy) prices are well known to be very volatile due to yearly changing weather and whatnot, and that signifies very little for economic policy; that is why there's a "core inflation". If you don't trust the obviously fake data the evil government publishes, why do you link to a data series sourced from the US Department of Agriculture? There's the MIT's Billion Prices Project, which is generated in some way from prices in online shops (but MIT is a private university, so we can assume it's not part of the government conspiracy). It usually tracks the official CPI data fairly closely, but sometimes it shows a slightly higher or lower number. http://blogs.wsj.com/economics/2014/05/01/why-weather-could-determine-who-wins-a-race-to-measure-inflation/?mod=WSJBlog http://blogs.wsj.com/economics/2014/05/01/why-weather-could-... But anyway, if you look at how the Fed has expanded the monetary base by 300% since 2008, how come that all this "money printing" doesn't lead to much higher inflation? Isn't that quite amazing? http://research.stlouisfed.org/fred2/series/BOGMBASE http://research.stlouisfed.org/fred2/series/BOGMBASE

littletimmy 11y ago

Secular stagnation. Basically, what happened to Japan in the previous decades is now going to happen to much of the developed world. A prolonged period of no growth with no monetary policy tools to help solve the problem, and no political will to implement a more active fiscal policy.

fweespeech 11y ago
Pretty much. Its not possible to recover from in the near term because the only reason it hasn't been worse is the fact we've been having the FED use every policy tool it could think of. http://www.economist.com/blogs/buttonwood/2014/11/secular-stagnation http://www.economist.com/blogs/buttonwood/2014/11/secular-st... http://www.independent.co.uk/news/business/news/imf-fears-global-economy-is-suffering-secular-stagnation-10161154.html http://www.independent.co.uk/news/business/news/imf-fears-gl...
- toomuchtodo 11y ago
  Perhaps its time we admit that growth isn't a requirement to an ever-incrasing quality of life? And investigate the transition to steady state economies? Who am I kidding, that'll never happen.
  - fweespeech 11y ago
    An ever increasing quality of life, in the western world, honestly isn't needed. The Quality of Life for the Middle Class in the West is good enough. The problem is, to bring everyone up to the 2015 standard of the West's middle class requires a helluva alot of growth.
    - scarmig 11y ago
      From today: India’s Economic Growth Hits Four-Year High http://www.wsj.com/articles/indias-economic-growth-hits-four-year-high-1432902911 http://www.wsj.com/articles/indias-economic-growth-hits-four... "India’s output growth accelerated to 7.5% last quarter, putting it ahead of China as the world’s fastest-growing large economy." To be fair, some of the data presented is faked, but it's in the ballpark. It'd be good if India and the developing world were all growing faster, but they're still coming along at a nice clip.
      - fweespeech 11y ago
        Yeah, but its also the impoverished and "lower class" in the US and the rest of the West. You need $30-$40k [depending on where you live in the US] per Adult to be middle class.
      - known 11y ago
        Little better than Ethiopia; http://www.dailymail.co.uk/indiahome/indianews/article-2480424/VISUAL-EDIT-India-little-better-Ethiopia.html http://www.dailymail.co.uk/indiahome/indianews/article-24804...
  - thewarrior 11y ago
    But no growth will make inequality much harder to digest. Noone minds inequality as much , as long as he is assured that his lot will improve some day. Take that away and it's only a matter of time before things boil over.
  - randomname2 11y ago
    Well, just saying, but "no growth" hasn't really been working out for Greece lately.
eli_gottlieb 11y ago
I do have to ask: who says there's no political will? Japan is unusual in having an extremely stagnant, consensus-based, establishment politics. In the Western world, labor movements against the current establishment have been gaining steam and local victories like they haven't done in decades. If political will stands in the way of getting out of the stagnation, it will be moved or removed.
- littletimmy 11y ago
  There is no political will in the sense that people in power don't have the will, and the people with will don't have power. I'm all for optimism, but I doubt we're going to see a sudden reversal of the oligarchy and power restored to the people anytime soon. I support labor movements, but I doubt they can supplant the lobbying of the corporations. If there will be any change at all, it will come about when corporate leaders put pressure on the government.
  - deciplex 11y ago
    He does have a point, though: Japan is probably (and hopefully) an anomaly in how they dealt with the crisis. It's one of the last places on Earth where Confucian ethics still hold a great deal of sway at all levels of society (for now, at least). And that ideology has its strong points, but it is hardly compatible with democracy. It is probably not a good example for how most of the West will deal with the same problem, though whether we do a better job of it remains to be seen.

izend 11y ago

Purchases were halted on 29 October 2014[63] after accumulating $4.5 trillion in assets

randomname2 11y ago
That's counting only US asset purchases though. Other central banks did another $17.5T (and still ongoing).

randomname2 11y ago

Well it took just $22 trillion in global central bank asset purchases to get a -0.7% US GDP print...

toomuchtodo 11y ago
If I was drinking coffee, I'd spit it out on my keyboard right about now.

tangled 11y ago

> one guest left a New York restaurant with the impression Bernanke, 60, does not expect the federal funds rate, the Fed's main benchmark interest rate, to rise back to its long-term average of around 4 percent in Bernanke's lifetime, one source who had spoken to the guest said. http://mobile.reuters.com/article/idUSBREA4F0OG20140516 http://mobile.reuters.com/article/idUSBREA4F0OG20140516

james1071 11y ago

Debt overhang-takes a long time to work through.

mkempe 11y ago
The endpoint of low-interest driven inflation by central banks is always a disaster. How long it takes to cure merely depends on how long it takes to end central banking and its arbitrary powers. Whatever capital was destroyed through government waste and general consumption will take time to rebuild. The sooner we're free from the scourge of central banking, the sooner we can all re-start growing and thriving.
- the_why_of_y 11y ago
  We have exceptionally low interest rates in USA and EU for 7 years now, but where is the inflation?
  - mkempe 11y ago
    For evidence look at real estate, stock market, and food (e.g. eggs [1]). Not the government-manipulated "consumer price index" numbers, but the actual, raw prices. [1] https://ycharts.com/indicators/us_eggs_price_receivedyearly https://ycharts.com/indicators/us_eggs_price_receivedyearly
    - the_why_of_y 11y ago
      The stock market? Securities are not consumer goods, why should they be counted in an inflation metric? Food (and energy) prices are well known to be very volatile due to yearly changing weather and whatnot, and that signifies very little for economic policy; that is why there's a "core inflation". If you don't trust the obviously fake data the evil government publishes, why do you link to a data series sourced from the US Department of Agriculture? There's the MIT's Billion Prices Project, which is generated in some way from prices in online shops (but MIT is a private university, so we can assume it's not part of the government conspiracy). It usually tracks the official CPI data fairly closely, but sometimes it shows a slightly higher or lower number. http://blogs.wsj.com/economics/2014/05/01/why-weather-could-determine-who-wins-a-race-to-measure-inflation/?mod=WSJBlog http://blogs.wsj.com/economics/2014/05/01/why-weather-could-... But anyway, if you look at how the Fed has expanded the monetary base by 300% since 2008, how come that all this "money printing" doesn't lead to much higher inflation? Isn't that quite amazing? http://research.stlouisfed.org/fred2/series/BOGMBASE http://research.stlouisfed.org/fred2/series/BOGMBASE