Ending economic stimulus: Timing is essential (US Recession)

[icebreaker]

Jan. 15, 2010

Since 2008 the winds prevailing in the world economy have been ferocious and have threatened to bring on a world downturn worse than the Great Depression of the 1930s. True to the characterization of former Fed chairman Marriner Eccles, the central banks of the world — especially those of the US and other industrial countries — have had to lean against the prevailing winds. Since its domain is restricted to the money supply and interest rates, America’s central bank has been able to undertake its leaning function only by encouraging banks and credit users — consumers and producers — to increase their lending and borrowing, respectively.

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