Balance Sheet Recessions and the QE Trap

Jon Banking, Economy, Fiscal Policies, Market Commentary

SUMMARY
The expectations of US GDP growth have slowed to 1.7 to 2.0% for the next 1 to 3 years. Market valuations are very high. There will likely be more volatility as Quantitative Easing (QE) unwinds. Inflation is a high medium-term risk due to high liquidity which will impact interest rates. INTRODUCTION
The investment model that I created looks at the current investment climate, but not the longer term. The format of this article is changed as I summarize the changes since The Escape from Balance Sheet Recession and The QE Trap was written by Richard Koo in 2014 in the Listening to the Experts Section. I believe that we will feel repercussions of the financial crisis for many years. Mr. Koo describes that this is likely to be true because of the unwinding of Quantitative Easing (QE). Financial Sense posted a CNBC video of Mr. Koo in April 2014 inKoo Warns on Fed “QE Trap” and Inflation.

This post was published at FinancialSense on 10/14/2016.