The result is what has been called secular stagnation, new normal, ugly deleveraging, balance sheet recession and Japanification. I call it “QE infinity”: a prolonged period of low growth and low interest rates, where policy-makers persist in implementing policies that won’t fix the problem. They won’t ever say they’re out of ammunition, but central bankers are starting to look like naked emperors. “Is monetary policy by itself going to create growth, employment? You seem to give a lot of responsibilities to the European Central Bank. Can monetary policy create growth by itself? The answer is no. Monetary policy can create the economic conditions for growth,” ECB President Mario Draghi told the European Parliament last year. Put differently, there is only so much monetary policy can do to re-start growth: it is an anaesthetic, not a cure. to the European Central Bank. Can monetary policy create growth by itself? The answer is no. Monetary policy can create the economic conditions for growth,” ECB President Mario Draghi told the European Parliament last year. Put differently, there is only so much monetary policy can do to re-start growth: it is an anaesthetic, not a cure.
Source: Our global financial system is broken. Here’s a plan for fixing it | World Economic Forum