The Great Debate UK
from The Great Debate:
With the U.S., Japan and Britain -- nearly 40 percent of the global economy -- facing the threat of deflation, it's going to be just too easy for one, two or all three of them to get the policy response horribly wrong.
The global economy is so connected, and our experience with similar situations so limited that the scope for error is huge.
Think of it as having three pilots flying a jet plane, one each operating a wing and the third managing the tail.
Oh yeah, and they all work for different airlines.
Though there will be much talk of international coordination in the next year, and though the central banks and governments of the world will likely be rowing in the same direction, their ability to gauge the effects of monetary policy and government spending on their own economies will be pretty limited, and even more so on the whole.