NEW YORK--(BUSINESS WIRE)--Kroll Bond Rating Agency (KBRA) has released macro-market research entitled “Navigating an Uncertain Global Economy in the Age of Financial Repression.” The report is based on remarks to be presented by Christopher Whalen at the events in Dublin and Madrid over the next week. The report makes the following key points:
- Since the 2008 financial crisis, global growth has slowed and the overall level of debt has grown. Individuals in many nations have made an attempt to reduce their levels of indebtedness, but in aggregate since 2008 nations have gone on a debt-fueled spending binge encouraged by the fact that the cost of servicing public sector debt has fallen.
- Global central banks acting alone have been asked to somehow address the burdens of global over-capacity, excessive debt, rising unemployment, and slack consumer demand. We should be grateful to our colleagues at the Fed and other central banks for trying, but it seems clear that new thinking is needed when it comes to both monetary and fiscal policy.
- Central to any new approach to monetary policy must be the realization that the secular decline of interest rates, which is the centerpiece of financial repression, necessarily also drives deflation. Without a sustained increase in the yield on investment assets, KBRA believes that the world faces a protracted period of low or no growth and the eventual destruction of public and private financial institutions that depend upon investment returns.
- Some observers believe that we are doomed to a future with low growth and tepid inflation. We at KBRA believe that the future prospects are far brighter, but only if public leaders find the courage to restructure bad debts and restore income to the global economy by ending regressive policies such as negative interest rates and quantitative easing. Prompt, decisive action will help to restore function to markets and financial institutions, and renew confidence among a resentful and uncertain public.
To view the report, please click here.
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KBRA is registered with the U.S. Securities and Exchange Commission as a Nationally Recognized Statistical Rating Organization (NRSRO). In addition, KBRA is recognized by the National Association of Insurance Commissioners (NAIC) as a Credit Rating Provider (CRP).
