Out of ammo?
Central bankers are running down their arsenal. But other options exist to stimulate the economy
Feb 20th 2016 |
WORLD stockmarkets are in bear territory. Gold, a haven in times of turmoil, has had its best start to a year in more than three decades. The cost of insurance against bank default has surged. Talk of recession in America is rising, as is the implied probability that the Federal Reserve, which raised rates only in December, will be forced to take them back below zero.
One fear above all stalks the markets: that the rich world’s weapon against economic weakness no longer works. Ever since the crisis of 2007-08, the task of stimulating demand has fallen to central bankers. The apogee of their power came in 2012, when Mario Draghi, boss of the European Central Bank (ECB), said he would do “whatever it takes” to save the euro. Bond markets rallied and the sense of crisis receded.
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But only temporarily. Despite central banks’ efforts, recoveries are still weak and inflation is low. Faith in monetary policy is wavering. As often as they inspire confidence, central bankers sow fear. Negative interest rates in Europe and Japan make investors worry about bank earnings, sending share prices lower. Quantitative easing (QE, the printing of money to buy bonds) has led to a build-up of emerging-market debt that is now threatening to unwind. For all the cheap money, the growth in bank credit has been dismal. Pay deals reflect expectations of endlessly low inflation, which favours that very outcome. Investors fret that the world economy is being drawn into another downturn, and that policymakers seeking to keep recession at bay have run out of ammunition.
Bazooka boo-boo
The good news is that more can be done to jolt economies from their low-growth, low-inflation torpor (see Briefing). Plenty of policies are left, and all can pack a punch. The bad news is that central banks will need help from governments. Until now, central bankers have had to do the heavy lifting because politicians have been shamefully reluctant to share the burden. At least some of them have failed to grasp the need to have fiscal and monetary policy operating in concert. Indeed, many governments actively worked against monetary stimulus by embracing austerity.
The time has come for politicians to join the fight alongside central bankers. The most radical policy ideas fuse fiscal and monetary policy. One such option is to finance public spending (or tax cuts) directly by printing money—known as a “helicopter drop”. Unlike QE, a helicopter drop bypasses banks and financial markets, and puts freshly printed cash straight into people’s pockets. The sheer recklessness of this would, in theory, encourage people to spend the windfall, not save it. (A marked change in central banks’ inflation targets would also help: see Free exchange.)
Another set of ideas seek to influence wage- and price-setting by using a government-mandated incomes policy to pull economies from the quicksand. The idea here is to generate across-the-board wage increases, perhaps by using tax incentives, to induce a wage-price spiral of the sort that, in the 1970s, policymakers struggled to escape.
All this involves risks. A world of helicopter drops is anathema to many: monetary financing is prohibited by the treaties underpinning the euro, for example. Incomes policies are even more problematic, as they reduce flexibility and are hard to reverse. But if the rich world ends up stuck in deflation, the time will come to contemplate extreme action, particularly in the most benighted economies, such as Japan’s.
Elsewhere, governments can make use of a less risky tool: fiscal policy. Too many countries with room to borrow more, notably Germany, have held back. Such Swabian frugality is deeply harmful. Borrowing has never been cheaper. Yields on more than $7 trillion of government bonds worldwide are now negative. Bond markets and ratings agencies will look more kindly on the increase in public debt if there are fresh and productive assets on the other side of the balance-sheet. Above all, such assets should involve infrastructure. The case for locking in long-term funding to finance a multi-year programme to rebuild and improve tatty public roads and buildings has never been more powerful.
A fiscal boost would pack more of a punch if it was coupled with structural reforms that work with the grain of the stimulus. European banks’ balance-sheets still need strengthening and, so long as questions swirl about their health, the banks will not lend freely. Write-downs of bad debts are one option, but it might be better to overhaul the rules so that governments can insist that banks either raise capital or have equity forced on them by regulators.
Deregulation is another priority—and no less potent for being familiar. The Council of Economic Advisors says that the share of America’s workforce covered by state-licensing laws has risen to 25%, from 5% in the 1950s. Much of this red tape is unnecessary. Zoning laws are a barrier to new infrastructure. Tax codes remain Byzantine and stuffed with carve-outs that shelter the income of the better-off, who tend to save more.
It’s the politics, stupid
The problem, then, is not that the world has run out of policy options. Politicians have known all along that they can make a difference, but they are weak and too quarrelsome to act. America’s political establishment is riven; Japan’s politicians are too timid to confront lobbies; and the euro area seems institutionally incapable of uniting around new policies.
If politicians fail to act now, while they still have time, a full-blown crisis in markets will force action upon them. Although that would be a poor outcome, it would nevertheless be better than the alternative. The greatest worry is that falling markets and stagnant economies hand political power to the populists who have grown strong on the back of the crisis of 2007-08. Populists have their own solutions to economic hardship, which include protectionist tariffs, windfall taxes, nationalisation and any number of ruinous schemes.
Behind the worry that central banks can no longer exert control is an even deeper fear. It is that liberal, centrist politicians are not up to the job.
低成長時代 全球央行子彈用完了？
作者：黃維德編譯 2016-02-22 Web Only
全球股市已然步入熊市，黃金表現極佳、銀行違約的保險成本大增、美國衰退之說亦甚囂塵上。市場擔心，富有世界對抗經濟衰弱的武器已經步數用盡，全都失效了。
自2007-08年危機至今，刺激需求這項任務就一直落在央行的肩上，但即使央行已投入許多心力，復甦仍舊衰弱，通膨亦處於低檔。
央行可以提振市場信心，也能為市場帶來恐懼。
歐洲和日本的負利率，讓投資人擔憂銀行獲利；量化寬鬆帶動新興市場債務上升，但債務出脫的威脅已然浮現。
縱使有這麼多低廉的現金，銀行的放款成長卻十分有限。投資人擔心，全球經濟會再次衰退，而且決策者已經快要沒有工具可用。
好消息是，還有更多方法可以刺激經濟。壞消息則是，央行需要政府的協助；及至目前為止，由於政治人物不願分擔責任，央行只得獨立負起重擔。現在，政治人物得與央行併肩作戰才行。
跳過銀行 直接灑錢給民眾
最激進的政策之一，即為結合財政和貨幣政策，例如印鈔以支持公共支出或減稅，跳過銀行，直接將現金送進民眾的口袋。
另一種方式，則是利用最低薪資等政策，影響薪資和物價，讓經濟得以從流沙中脫困。這些做法都有風險，但如果富有世界陷入通縮，就得考慮這類較為極端的手段。
其他國家可以使用風險較低的工具，也就是財政政策。許多國家有借款空間，例如德國，但一直不願借款。財政刺激如果能搭配合適的結構性改革，效果就會更為強大。
因此，問題並非沒有政策工具，而是政治人物不願行動。
若政治人物此刻不行動，全面市場危機或許還是會迫使他們有所行動。這樣的結果並不好，但也優於另一個情境；最讓人擔心的是，市場下跌和經濟停滯，讓氣勢愈來愈旺的民粹派取得政權。民粹派的經濟解決方案，是保護主義式關稅、暴利稅、國有化等各種傷害極強的機制。
許多人擔心央行再也無法發揮影響力。而在這樣的疑慮背後，其實還有更深一層的恐懼，也就是自由派、中間派的政治人物或許並不適任。（黃維德編譯）
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