An Old Tool to Fight a New Recession: Perishable Money
Note to the Fed: A currency that lost value unless it was spent right away worked wonders in Depression-era Austria.
John Maynard Keynes was a fan.
Photographer: Tim Gidal/Picture Post/Getty Images
Almost 10 years after the Great Recession ended, the growing threat of a new economic slowdown raises a troubling question: When the next recession strikes, what can the world’s central banks do? With interest rates low and their balance sheets still loaded with assets bought to fight the 2008 crisis, do they have the tools to respond? This column is one of six looking at that question.
When the longest-running economic expansion in U.S. history comes to an inevitable end, the Federal Reserve will likely find itself in a peculiar quandary: With rates already close to zero, it will have few tools to spark growth.