The Saver’s Dilemma
Interest rates are now close to zero throughout the developed world, but the global economy is slowing down, and financial markets went into a tailspin during the summer. The fundamental problem is simple: the market cannot be brought back into equilibrium when savers do not want to lend to those who would be willing to take these savings.
BRUSSELS – Interest rates are now close to zero throughout the developed world (the United States, Europe, and Japan). But the global economy is slowing down, and financial markets went into a tailspin during the summer. This suggests that the problem is more profound than one of insufficient monetary stimulus.