The country is entering a period of debt deflation, where households and businesses are forced to move funds from spending to debt repayment. This forces down economic growth and reduces inflationary pressures and long-term interest rates.
More Quotes from Lacy Hunt:
The Fed's raising rates is highly doubtful. The road to recovery will be very difficult and very uncertain. Inflation will continue working its way lower.Lacy Hunt
To have an effective monetary policy, you have to have a robust borrowing and lending cycle, ... The problem is that households and businesses are both overextended, while banks have problems with their current loan base. So we don't have a viable borrowing and lending cycle, which means that monetary policy is not working effectively.
Lacy Hunt
When consumers shift their income stream from purchases to saving, it slows GDP, and that's a long-term process, ... I think interest rates are going to remain very low for a couple of years.
Lacy Hunt
In Japan, for example, the debt deflation started in 1990 and price deflation started in 1992 or 1993. That's what we're in for right now.
Lacy Hunt
The net effect was to induce a tightening mode in the markets, in bank lending and in total bank reserve growth, while interest rates rose significantly, especially for corporate bond issues. In retrospect, that's not looking very smart.
Lacy Hunt
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Based on Topics: Business & Commerce Quotes, Countries Quotes, Debts QuotesBased on Keywords: repayment
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