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by gzu
2480 days ago
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Why does it have to be just a recession with rebound a few years later? I’d argue many are thinking too positive following 2008 where everything will go back to normal and prices will rally to all time highs. The US economy almost blew up into a full blown depression in 2008. The Fed swooped in to save the day. Can the Fed do that again indefinitely with not only US but potential problems worldwide? The global economy is reaching uncharted territory now with the amount of debt and negative interest rates. Maybe a depression like 1930’s are a relic of the past once we decoupled from the gold standard. Central banks today have full power to devalue currency indefinitely in order to maintain the financial status quo. |
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They've probably got more tools, as they've said that the foreign experience puts negative interest rates on the table as a realistic tool.
But, even if they can't, Congress could, in principal, step in with serious fiscal stimulus [0], which is less limited than the monetary tools available to the Fed. But they've been unreliable in the last few recessions, leaving the Fed holding the bag.