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bang57

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09/03/21

22:01

Post #: 51642138
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Originally posted by Infose: ↑

"The term secular stagnation refers to a market economy with a chronic (secular or long-term) lack of demand. Historically, a booming economy with low unemployment and high GDP growth (i.e., an economy at or above capacity) would generate inflation in wages and products. However, an economy facing secular stagnation behaves as if it is operating below capacity, even when the economy appears to be booming; inflation does not appear. In a healthy economy, if household savings exceed business investments, interest rates fall; lower interest rates stimulate spending and investment, which bring savings and investments into balance. However, an economy facing secular stagnation may require an interest rate below zero to bring savings and investment into balance"

The surplus of savings over investment may be generating price appreciation in financial assets or real estate.For example, the U.S. had low unemployment but low inflation in the years leading up to the Great Recession, although a massive housing bubble developed."

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