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Mervyn King's analysis of the “Great Stagnation”

Policymakers like to congratulate themselves on how they avoided the mistakes of the Great Depression during the Global Financial Crisis

We have not really addressed any of the fault lines at the heart of our economies and financial system. The low interest rate environment has given rise to a desperate search for yield, setting us up for renewed financial crisis.

Larry Summers resurrected the term “secular stagnation” six years ago

King’s big point is that there has been an intellectual failure at the heart of the policy response to low growth. We’ve seen it as just another Keynesian downturn, only worse, that can be treated using tried and tested, countercyclical fiscal and monetary means.

As so often with analysis of this sort, King is good at articulating what’s wrong with the global economy, not so good when it comes to solutions.

Jeremy Warner 22 October 2019

Secular Stagnation

Money, Banking and the Future of the Global Economy, by Mervyn King. 
Review by John Plender

Lord Mervyn King, former governor of the Bank of England. 
His book is called The End of Alchemy.

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