Keynsianism – the economic theory which holds that throwing good money after bad is wise economic policy if only done on a large enough scale.
Analysts are starting to fear what will happen if the world economy continues to slow given the fact that interest rates are already at zero percent across the globe. Each country seems to be trying to beggar itself and debase its currency faster than the next one lest the artificial bubble pop and leave them holding a debt they can’t service at normal interest rates.
Stephen King from HSBC warns that the global authorities have alarmingly few tools to combat the next crunch, given that interest rates are already zero across most of the developed world, debts levels are at or near record highs, and there is little scope for fiscal stimulus.
Apparently things are so bad that even Stephen King has given up writing horror stories as being too tame and is working in the field where the real horror show is happening — economic analysis.
OK, well, maybe it isn’t the same guy but it is funnier if we pretend now isn’t it?
We have already written about how some banks are even charging negative interest rates on some deposits so it is nice to know at least a few analysts are also starting to worry about how unprecedented this all is. It is hard to imagine that it will all end well.