The ECB’s decision on 2 February to raise interest rates again by 0.5 percentage points and to announce an equally large increase for March will go down in history as a grand misjudgement. Although it is already foreseeable that the price development in Germany and Europe will quickly approach normal values in the course of this year, …
In the past, there were still recessions in the economy. These were phases of shrinking gross domestic product (GDP) that lasted two, three quarters or a whole year. Rising unemployment and shrinking incomes were practically always the result. And monetary policy always had to lower interest rates and the state had to intervene by increasing its own (debt-financed) spending if it wanted to prevent worse, …
Fifty years ago, there was a very special situation in the global economy: There was a major supply shock, oil prices rose, but oil continued to be consumed in almost unchanged quantities, oil producers made enormous profits, measured inflation rates in Western countries went up and central banks raised interest rates to fight inflation. …
Germany’s new coronavirus stimulus package is wide of the mark, taking little account of the impact on investment, unemployment and loss of export income.
Cross-posted from Makroskop and Brave New Europe
Translated by BRAVE NEW EUROPE
The economic stimulus package is hailed by most of the media as a big bang. …
