Not much cheer considering how little progress in dealing with economic stagnation has been made since the blog began
There has not been much to celebrate of late but Your Neighbourhood Economist is happy to have reached a satisfying milestone – 100 blogs (not years). This blog started by asking “so what is going on?” back in November 2011, lamenting weak growth in the global economy. Little did Your Neighbourhood Economist (or many others) know that there would still be few signs of improvement over two years later.
Perhaps the only consolation is that things could be worse. At least the Eurozone has not self destructed (yet) thanks to the European Central Bank stepping in. US politicians also showed some surprising good sense despite all expectations to the contrary. But the positives are few and far between.
Governments in many countries have too much debt to be able to boost spending which is leaving monetary policy as the main route out of the current weak economic growth. However, expansive monetary policy has not been enough to generate much economic stimulus despite record low interest rates and loads of newly printed cash in the global financial system. In fact, monetary policy may be doing more harm than good.
Movements of surplus funds are creating havoc in emerging markets. Uncertainty over the direction of monetary policy is a major obstacle in the way of a return to economic growth. The costs of such policies are becoming more evident as the benefits are increasingly being called into question.
Central banks have struggled as the traditional tools of monetary policy have failed to have much of an effect. New ideas have been tried (such as forward guidance) but the desired results have proved elusive. Policy makers are getting side-tracked as new problems, such as concerns about deflation in Europe, draw their attention away from more pressing issues such as reforms.
Chances to celebrate may be a long way off so Your Neighbourhood Economist is glad for reasons to be cheerful (such as reaching 100 blogs) whenever possible.