Chapter from: "Escape from the Central Bank Trap: How to Escape From the USD20 Trillion Monetary Expansion Unharmed, Second Edition"
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Business Expert Press
Length: 24 pages
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Abstract
This chapter is excerpted from 'Escape from the Central Bank Trap: How to Escape From the USD20 Trillion Monetary Expansion Unharmed, Second Edition'. The financial crisis was much more than the result of an excess of risk. It is essential to understand that the same policies that created each subsequent bust are the same ones that have been implemented in the past years, through Quantitative Easing (QE) to allegedly 'solve' this crisis. In this book, I explain how, through lower interest rates and the artificial creation of money, central banks have created a massive liquidity trap, perpetuating bubbles, incentivizing high debt, and increasing financial risk. The objective of this book is to present solutions in fiscal and monetary policy that can be implemented today, while at the same time debunking magical solutions offered by some authors, particularly the so-called Modern Monetary Theory. I also explore the impact of monetary expansion on commodities and Emerging Markets, Trump's economic policies, Japan's fight against stagnation, Russia's central bank unique strategy, and the European Union model. Escape from the Central Bank Trap is about realistic solutions for the threat of zero-interest rates and excessive liquidity. Overcapacity, high debt and perverse incentives to assault taxpayers and consumers are not ingredients of welfare, but of secular stagnation. The United States needs to take the first step, defending sound money and a balanced budget, recovering the middle-class by focusing on increasing disposable income, and supporting productivity growth. The rest of the OECD will follow. Because supply-side policies work. Our future does not need to be low growth and high debt. We cannot expect humanity to progress if we enslave future generations with unsustainable debt levels just to perpetuate the imbalances of an inefficient economic model. Cheap money becomes very expensive in the long run. There is an escape from the Central Bank Trap.
About
Abstract
This chapter is excerpted from 'Escape from the Central Bank Trap: How to Escape From the USD20 Trillion Monetary Expansion Unharmed, Second Edition'. The financial crisis was much more than the result of an excess of risk. It is essential to understand that the same policies that created each subsequent bust are the same ones that have been implemented in the past years, through Quantitative Easing (QE) to allegedly 'solve' this crisis. In this book, I explain how, through lower interest rates and the artificial creation of money, central banks have created a massive liquidity trap, perpetuating bubbles, incentivizing high debt, and increasing financial risk. The objective of this book is to present solutions in fiscal and monetary policy that can be implemented today, while at the same time debunking magical solutions offered by some authors, particularly the so-called Modern Monetary Theory. I also explore the impact of monetary expansion on commodities and Emerging Markets, Trump's economic policies, Japan's fight against stagnation, Russia's central bank unique strategy, and the European Union model. Escape from the Central Bank Trap is about realistic solutions for the threat of zero-interest rates and excessive liquidity. Overcapacity, high debt and perverse incentives to assault taxpayers and consumers are not ingredients of welfare, but of secular stagnation. The United States needs to take the first step, defending sound money and a balanced budget, recovering the middle-class by focusing on increasing disposable income, and supporting productivity growth. The rest of the OECD will follow. Because supply-side policies work. Our future does not need to be low growth and high debt. We cannot expect humanity to progress if we enslave future generations with unsustainable debt levels just to perpetuate the imbalances of an inefficient economic model. Cheap money becomes very expensive in the long run. There is an escape from the Central Bank Trap.