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Strategies & Market Trends : Mish's Global Economic Trend Analysis
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To: Elroy Jetson who wrote (30801)5/26/2005 1:00:26 PM
From: GraceZ  Read Replies (2) of 116555
 
Don't forget they had Krugman and his ZIRP plan:

zero interest rate policy

The zero interest rate policy (ZIRP) is a macroeconomics scheme devised by economist Paul Krugman for economies exhibiting slow growth with a very low interest rate, such as contemporary Japan. Krugman's thesis is that these countries are in the so-called liquidity trap, even though common neoclassical economics disagrees.

Under ZIRP, the central bank maintains a 0% nominal interest rate, and then maintains inflation of the currency to make the value of otherwise stable investments, such as real estate, rise over time. It is effectively a way of imposing a negative interest rate.

For instance, with a 0% interest rate and 4% inflation rate, a house or commercial property will appreciate in value by 4% a year. This means that the return on the investment is calculated as if the interest rate is actually -4%.

The effect of a ZIRP policy is to encourage investment throughout the economy by making capital purchases more financially attractive. It is a new Keynesian policy and one, that the core of the common neoclassical economics rejects as working. The subject is under much debate.

answers.com

With wildly successful ideas like this it is no wonder the guy is so widely followed by readers of the New York Times for his commentary on economics. Of course before he started writing for them he was on an advisory panel for Enron, something that qualifies him for something, not sure what, but something.
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