Summary
Martin Wolf, Chief Economic Commentator of the Financial Times, examines how policymakers are testing the norms of economic life as they seek solutions to slow growth. The payment of interest goes back to the Babylonians. Today, the business of banking is based on paying savers and charging borrowers for money. Negative interest rates, paying banks for holding our funds, violates this established norm. Yet, five central banks, which together oversee a quarter of the world's economy, have opted to impose negative rates on the commercial banks that must use their services. The aim of this unconventional policy is to convince people to spend and invest rather save. The results so far have been mixed. So might central banks be running out of options to boost economic growth, nearly ten years after the start of the last financial crisis? Martin Wolf talks with economists and central bankers, past and present, about why ideas once thought utterly shocking, such as "helicopter money" and a the abolition of cash, are being openly considered. How might such policies affect the way people spend and save in the future? And how low can interest rates go? Producer: Sandra Kanthal.
Transcript
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| 0:00.0 | Thanks for downloading this podcast from the BBC. Now this isn't strictly speaking in addition of analysis, |
| 0:06.5 | but it's something we thought that our podcast listeners would really want to hear. |
| 0:10.0 | Martin Wilf of the Financial Times considers if we should be thinking the unthinkable |
| 0:14.8 | when it comes to revitalizing our economies. He asks how low can rates go. |
| 0:20.0 | In the |
| 0:25.0 | world of finance has seen repeated bouts of drama, |
| 0:28.0 | the Asian crisis of 1997, |
| 0:31.0 | the Lehman disaster and its elongated aftermath and now. |
| 0:35.0 | The Leave campaign celebrates as the UK decides to sever ties with the European Union, |
| 0:42.0 | ending a 40-year relationship. |
| 0:44.4 | The global financial markets were rocked by the decision. |
| 0:47.3 | The 100-share index fell by more than 8% when it opened and the pound hit a 30-year low overnight. |
| 0:54.0 | So here we are again, staring into the abyss, possibly for years. |
| 0:59.0 | I'm Martin Wolf, chief Economics Commentator of the Financial Times. I've been writing about |
| 1:06.9 | monetary policy for decades. Yet the condition of the world economy since the global crisis |
| 1:12.2 | which started in 2007 is unprecedented. |
| 1:16.4 | It has proved impossible to return the economy to what had previously been considered normal. The implications of this prolonged period of |
| 1:24.9 | weak demand and low growth are huge. There is a very real danger that if we do not manage to fix these problems, both the underlying big structural problems |
| 1:37.8 | and the cyclical last decade problem of very low growth in demand, we will see more and more people turning to |
| 1:45.9 | political extremes because the capitalist system is not delivering for them. |
| 1:50.6 | I mean the capitalist system has to earn support by delivering simultaneously |
| 1:57.6 | for the vast majority of people in society and when it doesn't do that you can't be surprised that people turn |
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