How to Finance Global Reflation
In recent years, unconventional monetary policy has shown that liquidity can be created against global savings, with relatively little impact on inflation, provided there is excess capacity in production and insufficient aggregate demand. It is time to take advantage of this newfound knowledge to revive the world economy.
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HONG KONG – There is a growing awareness that, in today’s globalized world, financial markets are beyond the control of national policymakers. While a few economies do have the scale to shape interconnected global markets, they face serious constraints, political and economic. As a result, the global economy is stuck in a pro-cyclical financial cycle, with few options for escape.