THE NEGATIVE-INTEREST-RATE GLOBAL SOCIETY

E Ray Canterbery

Chapter 18 in Inequality and Global Supra-surplus Capitalism, 2018, pp 283-296 from World Scientific Publishing Co. Pte. Ltd.

Abstract: While it is customary to think of interest rates belonging to individual nations, a handful of economists have referred to a global real interest rate. By “real,” they simply mean that the nominal rate has been deflated by a price index. One such economist is Olivier Blanchard. He was chief economist at the International Monetary Fund during 2008–2015, a most interesting period. He is a handsome, mature Frenchman who is now a Senior Fellow at the Peterson Institute and Robert Solow Professor of Economics at MIT. He is arguably the most cited economist in the world today. According to Blanchard, the global real interest rate fell from a peak of about 5 percent in 1986 to about 2 percent before the Global Crisis of 2008, and to about 0 percent in 2012. At low inflation rates, it has gone negative since. This may be the legacy, among others, of the Crisis. He considers this “bad news” for monetary policy but good news for fiscal policy. Given his credentials, we cannot ignore Blanchard, though there are some who disagree with him.

Keywords: Capitalism; Production Surpluses; Supra-surpluses; Casino Economy; Inequality; Vita Theory; Great Recession; Subsistence; Minimum Wage; Markup; Kaleckian Power; Stagnation; Innovation; Technological Advance; Income Distribution; Wealth Distribution; Fiscal Policy; Monetary Policy; Incomes Policy; Zero-interest Rate Society; Trump; 2016 Campaign; John Kenneth Galbraith; Conventional Wisdom; Expectations; Budget Shares; Veblenian Demand; Engel's Law; Casino Effect; Economic Power (search for similar items in EconPapers)
JEL-codes: N00 (search for similar items in EconPapers)
Date: 2018
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