Central Bankers Spurn Call for Radical Approach at Jackson Hole

[TexasTowelie]

Central bankers aren’t retreating from the fight against low inflation, although they’re wary of launching a fresh assault on any daring new fronts.

Faced with disappointing growth after years of ultra-low interest rates, Federal Reserve Chair Janet Yellen and her peers who met this weekend in Jackson Hole, Wyoming, re-affirmed their belief in power of monetary policy to stop economies from slipping into deflation. They were less keen on academic proposals that included the abolition of cash, raising their inflation targets, or keeping permanently large balance sheets.

Yellen, in her keynote address at the Kansas City Fed’s annual mountain retreat, said that additional tools remain “subjects for research” and were not being actively considered. Policy makers from Europe and Japan echoed her caution, while reaffirming that they stand ready to boost stimulus if fiscal action proves insufficient to spur growth and inflation.

Central bankers in advanced economies are struggling with low inflation, low productivity and weak levels of investment. For now, however, they’re being cautious in what they’re signaling about the future and are keeping more activist options at arm’s length.

Read more: http://www.bloomberg.com/news/articles/2016-08-28/central-bankers-spurn-call-for-radical-approach-at-jackson-hole

[elleng]

1. Swell.

Central Bankers Hear Plea: Turn Focus to Government Spending.

GRAND TETON NATIONAL PARK, Wyo. — Central bankers who gathered here to discuss better ways of jump-starting slow economic growth received a surprising message from their lunchtime speaker on Friday: Stop. You’re making things worse.

Christopher A. Sims, a Nobel laureate in economic science, told the annual conference that increased government spending was required to lift the world’s major economies from stagnation. The pursuit of innovations in monetary policy, he said, is diverting needed attention from the inaction of fiscal policy makers.

“So long as the legislature thinks it has no role in this problem, nothing is going to get done,” said Mr. Sims, a professor at Princeton. The best hope, he said, “is that people at central banks are willing to say publicly that this is what is necessary.” . .

Mohamed A. El-Erian, the chief economic adviser at Allianz, warned in a recent book, “The Only Game in Town,” that time was running out. If developed nations do not increase spending and pursue structural reforms in the next few years, Mr. El-Erian predicted, they will be locked into a new reality of slower growth.'>>>

http://www.democraticunderground.com/111678852

[TexasTowelie]

2. With the low interest rates it does seem like this is a great opportunity to focus on improving

infrastructure while the borrowing costs are low. However, the chorus singing no new taxes almost always drowns out progressives who realize the benefits for government to invest in areas such as transportation, education and mental health which all lead to a more productive workforce. The long term benefit to taxpayers comes when more people are employed rather than having people who cannot contribute to society because of the barriers they face.

I did not see the earlier thread that you posted, but it certainly provides a different perspective on the banker's meeting so I gave it a rec.