Must-Read: Hans-Werner Sinn: Secular Stagnation or Self-Inflicted Malaise?

Must-Read: WTF!?!? Hans-Werner Sinn appears simply to have failed to understand what the modern “secular stagnation” argument is. The facts that a very large credit bubble in the mid-2000s did not produce a high-pressure rising-inflation economy and that ultra-low interest rates today do not produce full recover are arguments for the secular stagnation hypothesis, not against it:

Hans-Werner Sinn: Secular Stagnation or Self-Inflicted Malaise?:

Some economists believe that this is evidence of “secular stagnation”….

The natural real interest rate has continued to fall. Stabilizing the economy thus is possible only by an equivalent decline in policy interest rates.In view of the huge credit bubble that preceded the crisis in Japan, the United States, and southern Europe, and the aggressive policies pursued by central banks over the last few years, I doubt that this theory is correct…