To have an effective monetary policy, you have to have a robust borrowing and lending cycle, ... The problem is that households and businesses are both overextended, while banks have problems with their current loan base. So we don't have a viable borrowing and lending cycle, which means that monetary policy is not working effectively.
More Quotes from Lacy Hunt:
Real income growth is deteriorating because of job losses, and income growth is going to remain weak until such time as it's reversed by a tax cut, which is months away at the earliest. Then there's a huge wealth loss from the stock market and no pent-up demand for goods.Lacy Hunt
This isn't going to be settled overnight, ... In New York, there will be debris removal and shoring up subway lines, but not massive reconstruction. People will use up the extra space available in New York, New Jersey and Connecticut. That doesn't mean they're going to be building new buildings.
Lacy Hunt
The Fed was given control of margin lending in response to the excess speculation in the 1920s,
Lacy Hunt
The Fed's raising rates is highly doubtful. The road to recovery will be very difficult and very uncertain. Inflation will continue working its way lower.
Lacy Hunt
The problem is, the private sector doesn't have the balance sheet capacity to take on more debt, and the banking system is not in a position to extend more credit. So monetary policy may not work at all.
Lacy Hunt
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