According to Markets Insider, the wave of monetary stimulus expected to hit the global economy in an effort by China, Germany, and the U.S. to stave off a possible recession won’t be enough as claimed by Morgan Stanley.
Morgan Stanley’s chief economist, Chetan Ahya, believes that the current mix of low interest rates, rising debt, and uncertainty over trade has created an environment where monetary policy will be ineffective. In a note to clients, he warned that the trade war has increased uncertainty, pushing global growth “to a post-crisis low.”
The U.S. Treasury yield curve has inverted for the first time since 2007, only adding to existing concerns of a slowdown.
Fiscal policy measures are the best chance the global economy has to prevent the recession, and several measures, such as deficit spending, payroll tax cuts, and infrastructure spending, have been proposed by states like Germany, the United States, and China.