On The Curious Persistence Of Inflationary Obsession - NYTimes.com
Joe makes the well-known point that aside from certain euro area
countries, yields on sovereign debt have plunged since 2007; investors
are rushing to buy sovereign debt, not fleeing it. I was a bit surprised
by his description of this insight as being non-”mainstream”; I guess
it depends on your definition of mainstream. But surely the notion that
what we have is largely a process of private-sector deleveraging, with
government deficits the consequence of this process, and interest rates
low because we have an excess of desired saving, is pretty widespread
(and backed by a lot of empirical evidence).
And there’s also a lot of discussion, which I’m ambivalent about,
concerning the supposed shortage of safe assets; this is coming from
bank research departments as well as academics, it’s a frequent topic on
FT Alphaville, and so on. So Joe didn’t seem to me to be saying
anything radical.
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