The Escape from Balance Sheet Recession and the QE Trap
ByRichard KooPublished by Wiley (£26.99)(Buy on Amazon)
Economist, author, and balance sheet recession specialist' Richard Koo is back with a new book:The Escape from Balance Sheet Recession and the QE Trap.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Koo "anticipated the current predicament in the West long before others", saysinvesting site ValueWalk, "and issued warnings in his previous books:Balance Sheet RecessionandThe Holy Grail of Macroeconomics."
In this new book, Koo, chief economist at Japanese bank Nomura, "issues warnings against those who are too ready to argue for structural reforms when the problems are actually with balance sheets".
The FT's Martin Wolf recognises Koo's major idea. "Richard Koo has a big hammer. It is the idea of balance sheet recession', which happens when the indebted focus on paying down debt. But people with hammers tend to view everything as a nail."
"The diagnosis of debt trauma' [where individuals and companies are discouraged from borrowing following a balance sheet recession] is persuasive", he writes. "Less persuasive is the view that it is right to see just about everything through the lens of balance sheet recessions'." But "least persuasive is the view that QE [quantitative easing] creates the risk of catastrophe, including of very high inflation."
On his New York Times blog, economist Paul Krugman is unimpressed. "Koo's original analysis which we all admire, and for which we all give him credit made the case for a fiscal solution, and he not only rejects any alternative but insists that it would be a terrible thing for reasons unclear. And it's really too bad, because he's hurting his own credibility."
Still, writes Wolf, "Read Koo. He has a hammer, even if everything is not a nail."
//
// ]]>
-
Christmas at Chatsworth: review of The Cavendish Hotel at BaslowMoneyWeek Travel Matthew Partridge gets into the festive spirit at The Cavendish Hotel at Baslow and the Christmas market at Chatsworth
-
Tycoon Truong My Lan on death row over world’s biggest bank fraudProperty tycoon Truong My Lan has been found guilty of a corruption scandal that dwarfs Malaysia’s 1MDB fraud and Sam Bankman-Fried’s crypto scam
