“To be or not to be”was Hamlet’s dilemma. The Hameletian philosophy is traced down the line in the Fed’s decision to lower rates. Rates almost nearer to zero will stop inflation from falling and falling says Kohn, on behalf of the policy makers. The Federation chopped the rate to zero, pumped hundreds of billions of dollars to keep the economy positive.Did they find success?
Carl Wash, a Santa Cruz economist ,of the university of California differs.His research points out that low rates would definitely clash with inflation against which the Fed is fighting. Kohn does not admit to this economist’s view.
The Fed’s buy of long term securities will spur growth, is another illustrative policy of Kohn. The economists ,again feel dithered , indicating that procuring these assets while rates are falling is highly risky. Kohn’s perception is contrary to the acclimed economists outlook. He believes that investors desire to raise short term securities. The central bank ,has a valid scope to step into the arena, thus affecting the value of the assets.
The European counterparts do not want to lower the rates . They have a target , and the process of moving ahead to reach the goal is getting on without much disruptions. They are determined not to cut rates further than 1%.
Kohn traverses a path less travelled, His government’s policy ,at the moment is not applicable.,in the real sense. It poses a real risk . How does Kohn proposes to annul inflation by bringing down the rates low.?His scheme appears mystical, beyond comprehension and totally out of context.
The Fed ,in Robert Frost’s words has
Miles to go before it sleeps
Miles to go before it revives, is the slight modification ,I contribute to the whimsical equation of Kohn.
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