Bank for International Settlements: Try Geonomics?
|July 4, 2014||Posted by Staff under Uncategorized|
This 2014 excerpt of the Washington Post, Jun 29, is by Robert J. Samuelson.
We need a shift in thinking, argues the Bank for International Settlements. Pay less attention to the business cycle and more attention to “the financial cycle.” It typically lasts 15 to 20 years and may straddle several traditional business cycles. In its early years, the debt levels of households and businesses gradually increase. This drives up asset prices — especially of real estate — and makes debtors feel richer. This is the cycle’s expansive phase. But when financial booms turn to busts, defaults multiply, asset prices collapse. The fallout lingers.
The Great Recession has inflicted enduring economic damage. Business investment has lagged. Many workers have dropped out of the labor force. Conventional business-cycle analysis didn’t anticipate these steep losses. Low interest rates by the Fed and other government central banks have only modestly helped recovery.
Given the financial cycle’s ugly climax, governments should shift their focus from smoothing business cycles to preventing excessive debt, counsels the BIS. “Good policy is less a question of seeking to pump up growth at all costs than of removing the obstacles that hold it back.”
Ed. Notes: When an insider gets this close to espousing geonomics but does not, is it because he’s not aware or is aware but afraid of what his cohorts and superiors would say?