There is an ongoing debate among economists and historians on whether inflation will ensue, and to what degree, following the humongous government stimulus packages and central banks' liquidity boosts, released all over the place in the prolonged attempts to remedy the financial imbroglio we're witnessing.
How economists can misunderstand the crisisRead the article here.
By Niall Ferguson
Published: May 29 2009
Yet a cat may look at a king, and sometimes a historian can challenge an economist.
A month ago Mr Krugman and I sat on a panel convened in New York to discuss the financial crisis. I made the point that "the running of massive fiscal deficits in excess of 12 per cent of gross domestic product this year, and the issuance therefore of vast quantities of freshly-minted bonds" was likely to push long-term interest rates up, at a time when the Federal Reserve aims at keeping them down. I predicted a "painful tug-of-war between our monetary policy and our fiscal policy, as the markets realise just what a vast quantity of bonds are going to have to be absorbed by the financial system this year".
© 2009 The Financial Times Ltd.
Which leads us to the thought of the day: invest in commodities and oil.
No comments:
Post a Comment