Dr. Yea-Mow Chen's lecture was extremely interesting. I have never learned so much about economics in one lecture. He basically summed up the world's current economic status in a three hour lecture.
In his lecture he answered six looming questions. The first was "As developed economies tighten their monetary policies will they be able to utilizes their monetary polices to stimulate the economies when another recession hits?" Basically he stated that since the recent world recession economies are cutting back on their foreign debt by cutting government spending. Also the central banks are lowering interest rates so low that the real rate (interest rate - inflation) is negative. Dr. Yea-Mow Chen stated that these two actions offset each other because the low interest rates enhance economic growth because people can borrow for less but the the government cutting back spending stifles the economy because there is less government money in the economy. So basically he said the only way to save the economy from another recession is for the consumer demand to increase but that doesn't seem to be likely with the recent consumer confidence index reports.
His second question was "How big is the European debt crisis?" To answer this he focused in on Greece's situation. He talked about how Greece could likely default if there is no bailout for them and that this would hurt many banks in the EU and could cause a domino effect.
The next question was "What is the European debt crisis's impact on the US economy?" The answer for this question revolved around the tightening of financial conditions. If the european countries do not spend as much then our exports will lower. This will slow down are goal of reducing our foreign debt and also hurt our domestic producers.
He also answered some questions like "Will there be a great depression or double dip?" "How to avoid a double dip?" and "Can China save the World?"
In his lecture he answered six looming questions. The first was "As developed economies tighten their monetary policies will they be able to utilizes their monetary polices to stimulate the economies when another recession hits?" Basically he stated that since the recent world recession economies are cutting back on their foreign debt by cutting government spending. Also the central banks are lowering interest rates so low that the real rate (interest rate - inflation) is negative. Dr. Yea-Mow Chen stated that these two actions offset each other because the low interest rates enhance economic growth because people can borrow for less but the the government cutting back spending stifles the economy because there is less government money in the economy. So basically he said the only way to save the economy from another recession is for the consumer demand to increase but that doesn't seem to be likely with the recent consumer confidence index reports.
His second question was "How big is the European debt crisis?" To answer this he focused in on Greece's situation. He talked about how Greece could likely default if there is no bailout for them and that this would hurt many banks in the EU and could cause a domino effect.
The next question was "What is the European debt crisis's impact on the US economy?" The answer for this question revolved around the tightening of financial conditions. If the european countries do not spend as much then our exports will lower. This will slow down are goal of reducing our foreign debt and also hurt our domestic producers.
He also answered some questions like "Will there be a great depression or double dip?" "How to avoid a double dip?" and "Can China save the World?"
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