Why Monetary Policy Is Failing
What should we make of the fact that core inflation in the U.S. is just as low as in the Eurozone if measured on the same basis?
David Rosenberg – former chief economist for Merrill Lynch, and now chief economist for Gluskin Sheff – comments:
I don’t know whether to feel good or uneasy about the fact that 90% of the industrialized world economy is now anchored by near-zero or negative short-term rates. At one level, this should be supportive of risk assets; at another level, it is a symbol of how fixed-income investors and central banks see the world — deflation at a time of ultra-low rates is certainly not a confidence builder.
Remember, quantitative easing actually leads to deflation in the long-run.