The Negative Interest Rate Legacy of Quantitative Easing

David Kelly discusses the role of courage in economic theory, focusing on inflation, wealth gaps, and aggregate demand. He critiques the effectiveness of monetary policy and central banks in addressing economic challenges, suggesting that fiscal measures targeting lower and middle-income groups could stimulate demand. The discussion also highlights the limitations of central banks in managing recessions and emphasizes the need for policy certainty to boost investment.

What is one of the main effects of quantitative easing (QE) as discussed in the video?

• It decreases asset prices.

• It increases real output significantly.

• It helps in reducing income inequality.

• It causes asset prices to rise more than real output.

According to the video, what could potentially stimulate economic growth?

• Raising interest rates.

• Providing more money to lower and middle-income people.

• Increasing taxes on lower-income individuals.

• Reducing government spending.

What is suggested as a limitation of monetary policy in the video?

• It effectively controls inflation.

• It always leads to a balanced budget.

• It can easily stimulate aggregate demand.

• It is ineffective in significantly boosting economic growth.

What role can central banks play during a recession according to the video?

• They can be a buyer of last resort.

• They can directly increase consumer spending.

• They can eliminate all economic uncertainties.

• They can ensure full employment.

What is one way to create more certainty for businesses as mentioned in the video?

• Reducing immigration.

• Increasing tariffs.

• Engaging in trade wars.

• Providing policy certainty.