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Breakingviews: Why QE end is good

Tuesday, November 04, 2014 - 03:54

Ending the Fed's money injections could be good for consumers and global growth, says Breakingviews.

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There's only the question what happens when the Fed stops QB breaking views that economic status Edwards had asked how some sort of wind might actually be a good thing for the world economy. Ever I this that the loss on him being Campbell's piece actually ya RR one must always making markets bubble doesn't lead to sustainable growth that's the point that. And sustainable growth as a good thing. Get sustainable growth I think everyone agrees is a good thing. And that that the city of the interplay between financial markets and the economy is a big topic one of the things that we don't talk about in this peace is salaam Larry Summers has been talking Mets secular stagnation. And he's been saying more or less of these hedging his bets that you need financial excesses just to keep the economy growing at an even halfway acceptable pace. And we're seeing really the opposite that the financial excesses actually. Cause. Growth problems and the court here is commodity prices. You know we we we see what happened oil pursuant to commodities without treaty at ultra easy. Policy com and and as Ian says. You pull QE a way I am it's like big tax cuts and emotion to. And yet you know no one really knows Indian. It makes the point exactly why oil which had been in. Incredibly stable at a 110215. Dollars for about a year and a half most its most stable price we've seen. In forty years. In the oil market. Then suddenly starts to drop of and is continuing to drop on below 8080 dollars a barrel now. No one really knows why that's happened but it's a good gas that the end of the first a decline in the end of US QB Tom has a big part to play. Oil and other commodities are kind of applause I financial asset if people stop the Q and as a financial last that the price starts to fall. And one that precipice fall consumers especially in poor countries where that's a big part of their there there budget. For energy and four for food. Get benefits are very. Yet the tax cuts you know and again he makes the going yet yes we singles a massive emerging economies. Developing nations but actually. It's pretty beneficial to develop one's. Developed ones suit because series comes as failure right six. A positive to have a lower loss wondering why. I mean tell tell me if I'm right insane as to why got caught him scenes we are focusing more on the sort Larry summer sticking it sickness animation time arguments. Then these documents well I think. That's good question and are they're very good answer I think than best answer is that economists don't. Haven't really thought. Through with the financial economic nexus and it very clear way. Say they're very they have very simple model that bubbling financial markets are strong financial markets. Are good for growth because of the trickle down effect of wealth and income and spending. And they're bad and we financial markets are bad for growth it's obviously a lot more complicated than that and I don't think economists have really grasp the complexity. That there are negative effects negative effects of high gas prices might actually help weigh the possible effects it's. Is there are reasons as I was right in registries. I don't. Well he was very excited and I think we're all excited to watch these oil prices and iron ore prices fall. We're trying to make sense of what it what why it happened which we don't have a perfect explanation of and what it means send. Might really mean something very good then forget OK everybody thinks that would pass that told me Campbell's he's which puts you find on the previous site. The US has taught that he's the sixteen studied GMC. I'm actual trouble is prices.

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Breakingviews: Why QE end is good

Tuesday, November 04, 2014 - 03:54