Saturday, November 21, 2015

FED'S WILLIAMS: Central Banks Need to Prepare for a World of Permanently Lower Interest Rates

The Federal Reserve and other global central banks need to consider new stimulus tools to deal with what may be permanently lower interest rates worldwide, said San Francisco Fed President John Williams, reports Reuters,

With the so-called natural interest rate in the United States now near zero, and equilibrium rates in other countries around the world also lower than in the past, central banks have less room to stimulate their economies in the face of shocks, Williams said at a conference at University of California Berkeley's Clausen Center.

Central banks should consider possibly keeping larger balance sheets, or using negative interest rates, to provide stimulus when needed, Williams said.

File under: Clueless

I had no clue that Williams was so out of touch with reality. Price inflation is coming and interest rates are going much higher.

I'm giving Willaims the 2015 G. William Miller Award, given each year to the central banker who displays over the top monetary policy thinking (There is a lot of competition for this award.)



  1. I don't see the credit expansion. The economy is over-saturated with debt.

  2. For those who have access to this low interest credit, it is a great opportunity to open, say, a used car lot, with seller financing. Regardless of central bank funny money monetary policy, we live in a culture of high time preferences -- which necessarily implies positive, even high, interest rates. Selling cars on time to those with impaired credit at high interest rates seems like a winner. You gotta have wheels.