Richard Koo has been known as the father of the “balance sheet recession” theory. The essence of his theory states that monetary policy becomes ineffective when interest rates drop to almost zero, and thus government spending (fiscal policy) can only rebalance the economy. One of the problems with this theory is the fact that government spending is also a culprit in the crisis we recently experienced and the incomprehensible unfunded liabilities that we are facing may soon bring us to the reality described by Stephen D. King in his book When Money Runs Out.
Comment
|
January 13th, 2014
Balance Sheet Recession Reconsidered: Rebalancing Acts at a Time of Crisis
John E. Charalambakis Ph.D., Chief Economist Richard Koo has […]
Pocket watch on one hundred dollar bill, studio shot — Image by © Tetra Images/Corbis
John E. Charalambakis Ph.D., Chief Economist
Richard Koo has been known as the father of the “balance sheet recession” theory. The essence of his theory states that monetary policy becomes ineffective when interest rates drop to almost zero, and thus government spending (fiscal policy) can only rebalance the economy. One of the problems with this theory is the fact that government spending is also a culprit in the crisis we recently experienced and the incomprehensible unfunded liabilities that we are facing may soon bring us to the reality described by Stephen D. King in his book When Money Runs Out.
Continue reading …
The views expressed on austriancenter.com are not necessarily those of the Austrian Economics Center.
Related
Comment
Can Moldova set an example for Ukraine?
September 10th, 2019
Comment
"Die deutsche Freiheit – Geschichte eines kollektiven semantischen Sonderbewusstseins"
June 24th, 2011
Comment
An Initial Market Outlook for 2017: Part I
January 12th, 2017
Comment
Federal Reserve Policies Cause Booms and Busts
August 19th, 2014
Comment
Free Market Road Show goes U.S.!
April 19th, 2016