Now is not the time to curtail spending on future | GulfNews.com

Now is not the time to curtail spending on future | GulfNews.com:

"As the unprecedented expansionary monetary policy that went into effect nearly a decade ago came to an end with the first rise in short term interest rates since 2006, jittery markets alongside darkening outlooks on economic growth have called into question the efficacy of this policy. And what impact it will continue to have as side-effects make themselves felt.

Seven years of zero interest rates and an expansionary monetary policy via the quantitate easing caused investors to pour money into commodities, real estate and commercial debt. As borrowing costs rise and asset prices fall, markets have turned treacherous. Financial disruptions have caused fear on the future of asset prices and economic growth.

A gush of credit that flowed into the monetary system from 2008 onwards led to investors pouring $973 billion into corporate bonds and a further $219 billion into real estate markets. Companies for the most part used the debt not to expand operations, but to buy one another and their own stock. Banks and companies alike used money flows to snap up assets at levels that were seen as attractive."



'via Blog this'