El-Erian Calls on Governments to Sustain and Broaden Recovery

Those familiar with the frequent media appearances of economistMohamed El-Erianwill quickly recognize the well-reasoned arguments in his new book,The Only Game in Town: Central Banks, Instability, and Avoiding the Next Collapse.

标题是指央行政策。El-Erian，前首席执行官和CO-CIOPacific Investment Management Co.and now chief economic adviser at German insurer Allianz, explains how central banks played a crucial role during and after the 2008–’09 financial crisis. Massive monetary and quantitative easing, particularly by the U.S. Federal Reserve under former chairman Ben Bernanke, was largely responsible for bringing economies and financial markets back from the abyss, he says.

But central banks can’t pull the global economy out of its slow-growth path on their own, El-Erian says. Governments need to implement structural reforms that will boost economic growth, raise aggregate demand, reduce debt and increase multilateral cooperation. He also calls for sounder decision making from companies, meaning less financial engineering and more spending on business operations.

Central banks “are expected to continue producing miracles,” El-Erian writes. “But their ability to pull new rabbits out of their hats has been stretched to an unsustainable degree.”

It’s long past time for central bankers to hand off to politicians for the next leg of the economic recovery, he says: “All it takes is for our politicians to step up their national, regional and global responsibilities.”

The structural changes El-Erian wants to see include education reform, measures to enhance labor flexibility and increasedinvestment in infrastructure. To boost aggregate demand, he recommends easing up on fiscal austerity and implementing tax reform. As for debt, some forgiveness is necessary for countries in which economic growth isn’t strong enough to reduce debt by itself, he contends. He also urges policymakers to strengthen the International Monetary Fund, the institution at which El-Erian worked for 14 years.

It’s hard to argue with El-Erian’s analysis and prescriptions. At some point, fiscal policy and the private sector will have to take over from central banks if global growth is to break out of what El-Erian calls the “new normal,” an era of sustained sluggish growth.

But given the political limitations on enacting economic reform throughout much of the world and the limited ability of the private sector to look beyond the next quarter’s earnings, expectations shouldn’t be too high. El-Erian doesn’t see a definitive break from political paralysis in the U.S. until the White House and both houses of Congress are controlled by the same party. Muddling through may be the best we can expect, he suggests at one point.

关于政治和经济方面的埃尔二元地址存在一定的周期性。经济/金融周期在引用El-Erian Borrows中良好描述Financial Timeschief economics commentator Martin Wolf. “Consider the past quarter century,”Wolf wrote in 2014，参考日本房地产和股权泡沫于1990年的崩溃，亚洲的繁荣，然后在1997年破产，2008年 - 09年危机，现在在中国的快速增长三十多年来，中国在中国越来越困难。“每个人都被称为一个新的繁荣时代，崩溃陷入危机和危机后，”狼写道。

El-Erian警告说，强烈的风险落入了“甚至降低了增长，周期性衰退和财务不稳定的回报”的新危机。他说，各国政府可以避免这种风险，但他说，他遵循他的政策处方，但他易于承认试图预测事情结果将在主要是傻瓜的差事。

In addition to his recommendations, El-Erian offers two interesting asides. He recalls urging his wife to make the maximum withdrawal from an automated teller machine on the day, in September 2008, when the Reserve Primary Fund froze redemptions after the货币市场基金“破坏了降压”because of its exposure to the failed Lehman Brothers Holdings. For El-Erian, the risk that the crisis could force a shutdown of the banking system was a very real one.

The economist also acknowledges a debt of his own. El-Erian is widely credited with coining the term “new normal,” but he writes that when he began deploying it, Bloomberg journalist Rich Miller gently pointed out that he had used it first.

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