{"id":12617,"date":"2015-09-25T06:59:09","date_gmt":"2015-09-25T11:59:09","guid":{"rendered":"http:\/\/olduvai.ca\/?p=12617"},"modified":"2015-09-25T06:59:09","modified_gmt":"2015-09-25T11:59:09","slug":"goldman-warns-on-limits-of-central-bank-policy-the-road-to-hell-is-paved-with-good-intentions","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=12617","title":{"rendered":"Goldman Warns On Limits Of Central Bank Policy: “The Road To Hell Is Paved With Good Intentions”"},"content":{"rendered":"

Goldman Warns On Limits Of Central Bank Policy: “The Road To Hell Is Paved With Good Intentions”<\/a><\/h3>\n

Back in May,\u00a0we noted<\/a>\u00a0that minutes from the ECB\u2019s April 14-15 policy meeting seem to reveal that the central bank is either obtuse or else suffering from a frightening bout of willful ignorance. Here\u2019s are the excerpts which led us to that assessment:<\/p>\n

\n
Since the Governing Council\u2019s previous monetary policy meeting on 4-5 March 2015,\u00a0the implementation of the ECB\u2019s expanded asset purchase programme (APP) had had a significant impact on euro area financial markets, contributing to further declines in government bond yields.<\/strong><\/em><\/div>\n

A strong signal needed to be sent to euro area governments urging them to press ahead with structural reforms and to take measures to improve the business environment.\u00a0<\/strong>Only with such complementary action could the full benefits of the monetary policy measures be reaped.\u00a0<\/em><\/p><\/blockquote>\n

Now obviously, implementing a \u20ac1.1 trillion program designed specifically to lower government borrowing costs is the exact opposite of sending a \u201cstrong signal\u201d to policymakers regarding the absolute necessity of getting serious about fiscal rectitude.\u00a0That is, if it does anything, PSPP discourages governments from reining in spending by artificially suppressing borrowing costs, which effectively robs the market of the ability to price government risk.<\/strong><\/p>\n

Well, as it turns out, even if the ECB doesn\u2019t understand this, Mario Draghi\u2019s\u00a0former\u00a0employer certainly does, because a new paper co-authored by Goldman\u2019s Huw Pill and Alain Durre acknowledges the role central banks play in discouraging fiscal discipline. Here\u2019s more\u00a0from Bloomberg<\/a>:<\/p>\n

\n
The unconventional monetary policies of central banks often face limits because they could end up hurting as well as helping economies.<\/em><\/div>\n

That\u2019s the warning of Goldman Sachs Group Inc. economists Huw Pill and Alain Durre in a paper prepared for the first annual MMF U.K. Monetary and Financial Policy Conference to be held in London on Friday.<\/em><\/p><\/blockquote>\n

…click on the above link to read the rest of the article…<\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

Goldman Warns On Limits Of Central Bank Policy: “The Road To Hell Is Paved With Good Intentions” Back in May,\u00a0we noted\u00a0that minutes from the ECB\u2019s April 14-15 policy meeting seem to reveal that the central bank is either obtuse or else suffering from a frightening bout of willful ignorance. Here\u2019s are the excerpts which led […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[8386,124,233,282,303,305,376,9262,1044,534,661,662,9261,4318],"class_list":["post-12617","post","type-post","status-publish","format-standard","hentry","category-economics","tag-borrowing-costs","tag-central-banks","tag-ecb","tag-european-central-bank","tag-fed","tag-federal-reserve","tag-goldman-sachs","tag-government-bond-yields","tag-mario-draghi","tag-monetary-policy","tag-qe","tag-quantitative-easing","tag-unconventional-monetary-policy","tag-zerohedge"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/12617","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=12617"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/12617\/revisions"}],"predecessor-version":[{"id":12618,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/12617\/revisions\/12618"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=12617"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=12617"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=12617"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}