Inversions, Negative Rates and MMT: The Twilight of Monetary Policy?
The past ten years have felt like Alice in Wonderland, or Dorothy in Oz, for anyone with an education in classical economics. Things look the same, and people sound the same, but the world doesn’t work the same. We need to look hard at yield curve inversions, negative interest rates and Modern Monetary Theory (MMT) to see if they help explain anything. This TABB Group Market Note looks at both the classical and modern treatments of monetary policy, and utilizes data from the International Monetary Fund’s World Economic Outlook to make sense of a very topsy-turvy world, and concludes that trusting blindly in whatever worked before isn’t a good model for the future.
- Fixed Income