:sigh: Interest rates are pinned at the zero lower bound by the central banks. They can't raise the rates without tanking the economy, because just about every country has massive private debt burdens in excess of 150% of GDP. Higher interest rates means higher debt servicing costs, which forces borrowers to delever, which reduces macroeconomic demand by precisely the rate of change in debt. When private debt is larger than GDP by 1.5x to 2x, even a small fraction of borrowers deleveraging results in a massive reduction in demand.
At the same time, the US stock market is at all time highs, due to $4 trillion dollars of QE (i.e. the Fed creating money to buy financial assets), making the filthy rich even more filthy rich. And the Fed can't reduce it's balance sheet without tanking the stock market, which would throw the economy, in general, into a tailspin. They tried, and now they're rapidly reversing that QT.
We're in a liquidity trap. And unless there's a modern debt jubilee or large UBI (or a world war), we're going to be stuck here for decades. https://youtu.be/Pfg04wJtz8c
As automation continues to grow, unemployment will grow and labor force participation will fall. The new jobs being created now are predominantly gig / contractor jobs. Worker's share of wages is at an all time low.
If you're in the US, take a look at Andrew Yang's campaign for president. The Freedom Dividend (UBI) is what this country needs in order to break the cycle.
At the same time, the US stock market is at all time highs, due to $4 trillion dollars of QE (i.e. the Fed creating money to buy financial assets), making the filthy rich even more filthy rich. And the Fed can't reduce it's balance sheet without tanking the stock market, which would throw the economy, in general, into a tailspin. They tried, and now they're rapidly reversing that QT.
We're in a liquidity trap. And unless there's a modern debt jubilee or large UBI (or a world war), we're going to be stuck here for decades. https://youtu.be/Pfg04wJtz8c
As automation continues to grow, unemployment will grow and labor force participation will fall. The new jobs being created now are predominantly gig / contractor jobs. Worker's share of wages is at an all time low.
If you're in the US, take a look at Andrew Yang's campaign for president. The Freedom Dividend (UBI) is what this country needs in order to break the cycle.