Larry Summers: Secular Stagnation

research.stlouisfed.org

 At the same time, technology has made the world "asset light". Many of the new services that we are enjoying are overlays to our existing asset base. Uber, Airbnb and their ilk simply do not require much capital expentidure. Thus, the demand for capital has simply declined and our increasing supply of savings is chasing fewer profitable investment projects.

These are not the only explanations. According to Ken Rogoff we have come to the end of a "debt super-cycle". The world is still working off an excess of debt which reduces the propensity to invest and to consume. And Robert Gordon thinks that we are coming to the end of the third industrial revolution (#1 was steam, #2 was electricity and #3 is computing), which has dramatically slowed productivity growth. 

For my part, I don't know why interest rates are low. Neither do Barnanke, Summers, Gordon and Rogoff. They are just a lot more eloquent than the rest of us in working through these plausible explanations. 

But all of this makes me think of Yuval Harari's recent book: 

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