While discussions about interest rates can be awfully boring, monetary policy affects our lives profoundly.
Central banks around the world are experimenting with monetary policy that’s never been used in the history of mankind, and that’s leaving many observers nervous about the future of the global economy.
Before the Great Recession, the formula for stimulating the economy used to be so easy. During a recession, or a contraction of the economy, the Federal Reserve would lower interest rates to boost growth. Lower interest rates would increase money available for borrowing, and the economy could recover. Like a get out of jail free card, policy makers always had wiggle room to get the economy going again.
[graphiq id=”20Y3UV3K2wZ” title=”Federal Funds Rate vs. Inflation” width=”600″ height=”605″ url=”https://w.graphiq.com/w/20Y3UV3K2wZ” link=”//www.graphiq.com/wlp/20Y3UV3K2wZ” link_text=”Federal Funds Rate vs. Inflation | Credio”]
Today, with interests rates barely above zero, there are serious questions about what the “Fed” can do to combat the next economic downturn. Right now, there are fears that there’s another global recession around the corner, and that’s leading many countries to experiment with negative interest rates.
In a four-part series by The Street, they break down the cases for and against negative interest rates, how to invest safely with them, and why the U.S. might join a negative-rate club.
Read it on The Street.
David is the Editor of Bold. He's especially passionate about millennial economic empowerment. A former local news reporter, David is originally from the Little Havana area in Miami, and later became a pioneer resident of the Disney-inspired town of Celebration, Florida. David holds a Master’s in Public Policy from the Harvard Kennedy School.
Constable is an economics/financial markets commentator. Currently, he writes the monthly “In Translation” column for The Wall Street Journal, and a weekly investments column for U.S. News & World Report. He also contributes regularly to Barron’s, TheStreet, Fortune, Forbes.com and other publications.
Prior to becoming a full-time economics journalist/commentator Constable worked in a variety of strategy/advisor roles for major corporations.
His first book, The WSJ Guide to the 50 Economic Indicators that Really Matter, won an economics category award in the 2012 Small Business Book Awards at Small Business Trends. It has been translated into multiple languages. He authored the Rudolf Wolff mini-guides to the London Metal Exchange, and the Real Money Guide to Investing in Gold.
McCall is an intern at Bold. She graduated with her Bachelor's degree in Broadcast Journalism and loves all things media and communications. As a San Diego native, she thrives in the sun and enjoys being outdoors.