Nov 18

Krugman says US Fed’s Cash Rate ideally should be minus 6.7%

My favourite Nobel Prize Winning economist’s article can be found here…This is quite an astounding conclusion but not too far fetched given the evidence. What really concerns me is that whilst the US Cash Rate ideally should be much lower, our Reserve Bank and (judging by the Yield Curve) our markets envisage significant cash rate hikes over the next 12 months….mmm…do you think we Australians are being just a little optimistic about our growth potential or expectations given the clearly disastrous economy of the US (& Japan,  UK, Euro zone etc)?

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