Tuesday, 19 January 2016

The overuse of monetary policies today may damage the monetary system in the future.

The IMF expects that in 2016 and 2017, the global unemployment number will increase. Some developed countries, like the US, the UK and Germany, may have decreases in their unemployment rates. However, China as well as other emerging markets may suffer from their economic growth slowdown, their unemployment rates are expected to increase. Moreover, some Arab countries may be affected by the falling oil price and have rising unemployment numbers. All these factors will add to an increase in the global unemployment number. This implies that the global economy may be in decline in the next two years and the global central banks may use more expansionary monetary policies. There could be a possibility that when the global economy is recovering in the future, all the potential risks created by these expansionary monetary policies may be accumulated and add a sudden and huge inflationary pressure on the global economy. Such consequence may lead to a collapse of the current monetary system.

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