Monday, August 24, 2015
Why There May Be No Need For Fed To Raise Interest Rates
Larry Summers is concerned about secular stagnation. He does not believe that the US economy is being stalled by temporary headwinds, or that interest rates should be increased to promote financial stability. He argues that the Fed should be more concerned about market forces that are operating to increase the risk of financial instability. There is no need for the Fed to increase the risk of financial instability by raising interest rates during a market sell off. He expects low interest rates to be the new normal for the next decade.