The Myth Of Central Bank Stimulus And Economic Recovery

The Myth Of Central Bank Stimulus And Economic Recovery

Article Summary

  • Three significant QE phases in the United States has quadrupled the monetary base, kept interest rates low and stimulated job growth. The inflationary effects have yet to be fully realized.
  • The effects of Abenomics in Japan has helped to prop up inflation but still haven’t led to significant GDP growth.
  • The markets have reacted favorably to the ECB QE announcement, necessary in an 11.5% unemployment environment, but time will tell regarding the positive effects of this and other QEs.

The United States wrapped up its unprecedented quantitative easing program late last year and now Europe is wading into those very same waters in the hopes that it will kick-start its economy and prevent deflation. Considering that we’re facing improving growth this year, it seems – on the surface at least – that central bank action works to prevent recessions and trigger economic booms…

 

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