In Europe, as in the global economy more generally, growth has been too slow for too long. In Europe, unlike elsewhere, this is setting up an existential crisis. Restoring growth now and on a basis that directly addresses the social discontent fuelling the rise of political fringe parties has become mission-critical to sustaining the experiment.
Many solutions have been tried or proposed. Nothing has worked well, and nothing will unless the European economy is shifted from its current bad equilibrium of stagnant growth and deflationary pressures – stag-deflation, which is the mirror image of the stagflation (slow growth and high inflation) faced by the industrialized world in the 1970s.
The solution to stagflation was to…
In the United States and around the world, millions of people are now asking “how could this happen?” How can we make sense of an America in which Donald Trump becomes the next president? Discovering the real answer to this question will be good for America—and for Canada, too.
Many people who are now angry and perplexed focus on Donald Trump, the man. They argue that he is the real problem America now faces—that he is not temperamentally capable of being president and that he cannot be trusted in the White House. Those skeptical of this view point out that Mr. Trump may surround himself with knowledgeable people and that the famous checks and balances in the U.S. system of government will prevent him from doing crazy things.…
In the Great Recession of 2007-2009, the Bank of Canada was able to minimize the damage to the Canadian economy relatively easily. However, the low interest rate environment continuing to dog all central banks is likely to make the bank’s current monetary policy tool kit insufficient to deal with any repeat of 2007-2009.
The government of Canada and the Bank of Canada announced the renewal of the inflation-control target on Oct. 24. The announcement contained no surprises, leaving the main features of the previous control target unchanged. For the next five years, the target will remain a year-over-year growth rate of 2 per cent in the consumer price index, expressed as the midpoint of a 1- to 3-per-cent range.
However,…
