The Fed Needs to Be Buying Recession Insurance—But Is Not: DeLong's Morning Coffee

The Fed Should Buy Recession Insurance: Fresh at Project Syndicate

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Fresh at Project Syndicate: The Fed Should Buy Recession Insurance: If the United States falls into recession in the next year or two, the US Federal Reserve may have very little room to loosen policy, yet it is not taking any steps to cover that risk. Unless the Fed rectifies this soon, the US–and the world–may well face much bigger problems later. The next global downturn may still be a little way off. The chances that the North Atlantic as a whole will be in recession a year from now have fallen to about one in four. German growth may well be positive this quarter, while China could rebound, too. And although US growth is definitely slowing–to 1% or so this quarter–this may yet turn out to be a blip. Let’s hope so. Because if the next downturn is looming, North Atlantic central banks do not have the policy room to fight it effectively... Read MOAR at Project Syndicate

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