This article from January of this year discusses the stimulus introduced that week by the European Central Bank in efforts to raise the region from its economic slump. The article discusses that while the ECB knows of the changes its needed to make, it needs everyone to get on board to make change possible. What's interesting is that the governor of the bank of England warns that investors shouldn't always trust that the central bank is going to come through when asset prices fall. The article also argues that the new package could increase increase wealth inequality even further. The governor of the Bank of England stated: "Monetary police always has distributional consequences"
Looking from January to now, what do you think about the impact of the ECB stimulus? Do you think that changes in Europe and the Eurozone are heading in a good direction? Or are central banks no longer to be trusted?
Does monetary police fuel income inequality?
Based on what we have read, the stimulus should be good for the Eurozone. Now it all depends on how countries implement policy. I think that Central Banks should still be trusted. So far, they have been proven to be reliable in bringing forth stimulus packages. As far as inequality, it makes sense that stimulus breeds inequality considering stimulus is for the people that lost their money rather than the ones that saved their money.
ReplyDeleteI completely understand the ECB's need to have the citizens get on board with what they're trying to implement. Without the support of the citizens, the economies aren't going anywhere. It's like when we talked about economies being self prophesizing. A central bank can make all the changes they want, but if their people don't believe the economy can come out of a slump, they won't. And vice versa.
ReplyDeleteI agree that the stimulus has been good for the Eurozone. I remember a few weeks ago reading about outcomes in the first quarter for the Eurozone, with reports saying that QE policies were so far effective. For now, it's important for citizens to believe in and trust in the ECB; like Aleks said, we've learned about the self-fulfilling prophecy of economies. As far as the inequality piece, I agree with what Nolan commented.
ReplyDeleteI agree with Nolan and Cameron in that the stimulus has been good for the Eurozone depending on how the policy is implemented. Also, I agree with Aleksis that the people should be well educated on how to react to the policy in order for the policy to be fully effective in bringing the economy out of the slump. Finally, monetary policy does give rise to inequalities since people who lost money are favored as stated above by Nolan.
ReplyDeleteI also agree with the comments above that the stimulus has been good for the Eurozone and has been effective especially with the support of the citizens within the Eurozone. I also have to agree with Aleksis that without the support of the citizens I do not think that economies can be successful due to this self prophesizing concept in economics. If people do not believe in the policy that a government or central bank is using then the effect will not be as great.
ReplyDeleteI think that the ECB stimulus is impacting the Euro Zone in a positive manner, changes are just occurring very slowly. I also agree that central banks should still be trusted. The ECB has proved to come through on its stimulus package and hasn't given the Euro Zone a major reason not to trust them. I did find it interesting and somewhat odd that the governor of the bank of England "warns that investors shouldn't always trust that the central bank is going to come through when asset prices fall." In my opinion, the governor of the bank of England should be supporting the ECB rather than talking badly about it.
ReplyDeleteI also agree with the comments above that the stimulus implemented by the ECB has had a slow but positive impact on the Eurozone, and that the ECB is still reliable. I completely agree with Coueure in the article that "You can have the best of both worlds if countries implement programs to support the unemployed and improve the labor market."
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