Central banks are facing a problem – potentially a fatal one. An increasing number of academic studies have emerged that blame central banks for having a much greater influence on the development of long-term real interest rates than mainstream economic thought has previously attributed. This is no small matter. If the findings of these studies are confirmed, they will necessitate rewriting basic economics textbooks. For example, it would support the idea that highly expansionary monetary policy may not stimulate economic growth or consumption but rather just inflate asset prices, such as stocks or real estate. This, ... (full story)