A Keynesian economist that sounds a little bit like Peter Schiff? Who would have thunk it?
Speaking in an interview with the Economic Times, Robert Shiller, Yale University Economics Professor and Nobel Laureate, stated that the United States could inject another round of quantitative easing if the economy doesn’t improve.
Although he conceded that it’s far from happening, the fourth round of QE isn’t exactly off the table.
“If things get bad, yes. They are not on the track right now, but that is the tool that is widely admired and I think that if it does get bad, they will certainly go back,” said Shiller, adding that things won’t get as bad as they did in 2008.
“First of all, the 2008 crisis was bad. So, it would be foolish to predict something that bad again. We do see some improvements. For example, banks have higher capital now. On the other hand, it does have a risk of becoming a crisis. But it is hard to predict these things.”
Shiller noted that the current economic woes transpiring all over the world shouldn’t be blamed entirely on the Federal Reserve or other central banks.
“I do not think they are primarily responsible. I think there is a tendency to exaggerate the importance of central banks when they are doing a good job. There was a weakness in the world economy and there was some effort to stimulate it,” he said.
“Now, it did have an exaggerated impact on financial markets. Maybe they should have been more concerned about that but I do not think I would pin most of the blame on them. I think we cannot expect them to control everything perfectly.”
Central banks have been so desperate to improve their respective economies that they have gone down the path of negative interest rates (SEE: Will negative interest rates dominate monetary policy in 2016?), or have at least debated its merits, including the Fed.
Albert Einstein -Insanity: doing the same thing over and over again and expecting different results.
The credit bubble that the central banks have created is going to burst soon and i am afraid we will have a worse recession than 2008.
We would all be better off if the FED members just went on vacation for 3 to 5 years and let the economy adjust on its own.
There would be a whole lot less pain, but they just cannot stop themselves.