The Big Easing: Are Global Stimulus Policies Burning Out?

Are Global Stimulus Policies Running on Fumes?


Written by John Rothans

Nov 29, 2019

The global economy was on fire in 2017 and 2018. Manufacturing and trade buoyed economic growth to new heights. In 2019, however, the flames have begun to fade.

  • The International Monetary Fund deemed global growth to be “subdued” in its July 2019 report.
  • The Organisation for Economic Co-operation and Development (OECD) recently cut nearly all of its growth forecasts to levels reminiscent of the 2008 financial crisis.
  • Even everyday news outlets, like NBC News, cite a slowing global economy as a pain point for retailers this holiday season.

What can be done to reignite the fire? The OECD’s chief economist argues that governments and their central banks should do more to spark diminishing economic confidence. The thing is, central banks (whose role is to manage their country’s money supply and interest rates), have already done so much—and their policies may have stifled the flames of economic fortune in the first place.

Read on for a snapshot of key factors that are impacting the global economy and what you can do to help ensure your economic future remains bright.

Low Interest Rates Can Have a Dangerous Downside

From Saudi Arabia to New Zealand, central banks around the world lowered their interest rates in 2019. Some banks even pushed rates into the negative, which means they chose to pay a fee to keep their money in a vault as opposed to lending it out to consumers and businesses.

While low interest rates are designed to spur borrowing and spending, they don’t come without risk.

“In cutting already low interest rates to bolster a sagging global economy, monetary policymakers risk fueling asset bubbles that may eventually burst and propping up zombie companies that could keep dragging down growth,” warns a Bloomberg report.

Quantitative easing (QE) is another monetary policy with downsides, analysts warn. It has the same effect as increasing the country’s money supply, lowering interest rates, and encouraging growth. However, “given the current level of inflation expectations and the current level of rates, doing QE again is not going to create the same surprise effects,” argues Torsten Slok, chief economist at Deutsche Bank Securities.

If traditional stimulus tactics, like low interest rates and QE, can’t be counted on, where do we turn for help?

>> Download U.S. Money Reserve’s Special Report, The Big Easing: Are Global Stimulus Policies Burning Out?, to see how the “easy money” measures of 2019 could impact your 2020.

Trade Wars Have Resulted in Market Fallout

You can’t listen to the news without hearing something about the U.S. and China trade spat. The U.S. slapped tariffs on Chinese goods, and in turn, China retaliated with tariffs on American goods.

As a result, Wall Street feels the pressure, and consumers see higher prices for everyday goods. China is suffering, too, along with the rest of the world.

“A lose-lose trade war is not only harming the main contenders, [but] it also compromises the stability of the global economy and future growth,” says Pamela Coke Hamilton, Director of International Trade and Commodities at United Nations Conference on Trade and Development. “We hope a potential trade agreement between the US and China can de-escalate trade tensions.”

>> How bad are we slowing? What countries are affected by our slowdown? U.S. Money Reserve’s Special Report dives into the impact of the trade war on both the U.S. and the globe. Download it now.

Your Financial Future Can Stay Bright

There are more factors at play besides extreme monetary policy and an unresolved trade war. We discuss these and more in our new Special Report, The Big Easing. It’s free and available for download today.

What you want to know now, however, is how you can protect your money. Where is your money safe?

Consider gold. During the 2008 financial crisis, it rose to more than $800 an ounce and hit an all-time high of $1,923 per ounce in 2011. From 2011 to 2014, Americans had more confidence in gold as a long-term asset than they did in real estate, stocks/mutual funds, and savings accounts, notes Gallup. Sentiments may be shifting that direction again.

Gold remains an international asset that’s linked to no particular country or economy. It stands strong, having outperformed several major asset classes over time. Gold is a known store of wealth that can provide long-term diversification benefits.

Holding gold may be part of a solid survival strategy for you, and a way to keep your personal economy shining brighter than the world around you. Download U.S. Money Reserve’s free Special Report, The Big Easing: Are Global Stimulus Policies Burning Out?, to learn why gold might be the global disaster plan you want.

The Big Easing - Are Global Stimulus Policies Burning Out? Download the Free eBook Now!


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