Would you agree that?
* if the governor of a Central Bank states “It was necessary to address heightened risks of too prolonged a period of low inflation” he should immediately be replaced and sent to an isolated island in the Pacific where he could ponder his crime ? The other heroes of QE, viz., Greenspan, Bernanke, Yellen and possibly also the Nobel prize winner Paul Krugman should keep him company. The latter had suggested some time ago that one should push up inflation to 4 %.
* we should give all economists with their highly sophisticated models and theories a prolonged vacation and let nature and the markets decide when an economy goes up and when it goes down?
* the number of variables in macroeconomics is infinite and that any attempt to “manage" the economy is a futile exercise? Only the pronouncements of politicians and central bankers can influence – and only short term the behaviour of the players.
* only the expectation that there will be buyers for its products can entice a business to invest in new machines, factories and people?
* no business will make investments only because money is cheap?
* inflation is to the benefit of those who are in debt and punishes the ordinary responsible citizen who earns a salary, pensioners who receive a pension and perhaps some interest on their saving accounts ? Sorry, I forgot to mention the unemployed and others who receive benefits.
* quantitative easing benefits the financial industry and the rich at the expense of the middle-class and the poor and thus contributes to the unequal distribution of wealth? Supposedly 1% of humankind already holds 50% of the world’s wealth.
* if QE, the printing of money, can benefit the real economy short and medium term, it cannot, however, solve the underlying problems and hence makes the rebalancing only more painful later on? Therefore,
* the question of whether QE can be challenged on moral grounds is legitimate?
* that, given the sovereign debt level, only by putting more money into the pockets of consumers or, rather increasing their purchasing power, can you – without aggravating the problem of debt – expect a sustained up-turn in the economy?
* deflation means that consumers gain purchasing power and that increased purchasing power of the masses leads to economic growth?
* the fear of deflation is largely exaggerated, in particular when due to lower oil prices?
Have we not seen for decades deflation in important sectors of the economy? if you look at the prices and added features of, e.g., cars and anything electronic, textiles, furniture, etc.?
Is it true that people put off purchases – beyond a few months – because of the expectation that prices will fall?
Of course, for people, companies and governments which are heavily indebted, deflation is poison because it de facto increases their debt.
And, to conclude, here is open question:
What is, what should be, the role of a Central Bank and what of a government?