Some economic assumptions are so deep-rooted that market experts, policy makers and economists forget to question their origins. One of these is the equilibrium real interest rate, the mythical rate at which the economy is in balance and to which central bankers adapt their policies in order to drive the economy faster or slower. Investment expert James Montier offers his iconoclastic but thought-provoking take on the notion, which getAbstract believes will intrigue – or infuriate – financial and economic professionals.
In this summary, you will learn
- Why investment expert James Montier says the equilibrium real interest rate is a myth,
- How a misguided belief in interest rates’ ability to manage the economy makes central banks’ monetary policies ineffective and
- Why fiscal policy is a better driver of economic growth.
About the Author
James Montier is on the asset allocation team of the investment management firm GMO.