Economics
Negative Rates Advocate Spells Out the Obstacles at Jackson Hole
- Ex-Fed economist Goodfriend: May need to abolish paper money
- ‘Nothing more than the sensible application’ of economics
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What should policy makers do if the next recession hits before central bankers climb out of their low-interest-rate fox holes?
Carnegie Mellon University professor Marvin Goodfriend gamely took up that question in a paper he delivered Friday at the Federal Reserve Bank of Kansas City’s annual retreat in Jackson Hole, Wyoming, making a case for why aggressive negative interest rates might be the best answer. However, by meticulously detailing the groundwork necessary to make negative interest rates effective, Goodfriend arguably also showed why they may never happen in the U.S.