A recent article by Manuel Hinds - El Salvador’s former finance minister - tells us to heed the new warning by Mr Rajan - the economist who predicted the financial crisis and current governor of the Reserve Bank of India – hinting at the fact that the combination of high rates of monetary creation and extremely low interest rates are unsustainable. All economic activities that depend on low rates will become unprofitable once interest rates inevitably start going up again. Hinds argues that a sustained period of low interest rates are likely to create conditions for a new financial crisis.
This is in contrast with the opinion of academics such as Edin Mujagic who predict that we will go through a prolonged period of financial repression fed by low interest rates and high inflation for the foreseeable future.
Please read the full article by Mr Hinds in Quartz.
You can also sign up for the EuroFinUse conference on Financial Repression taking place in Vienna on October 18.