Previous Chair of the Federal Reserve System Janet Yellen and previous President of the European Central Bank Mario Draghi spoke on Sunday in the US.
At the American Economic Association's annual meeting (Draghi was via video link).
Yellen said the US gripped by secular stagnation (where desired savings are bigger than investment, which serves to hold down and interest rates):
- structural forces holding down interest rates include an an aging population, sluggish productivity "These factors are apt to prove chronic by nature"
- "monetary policy has a meaningful role to play, it's unlikely to be sufficient in the years ahead … (but it should not be the only policy response) … ""We can afford to increase federal spending and cut taxes"
Draghi banged the fiscval drum too
- "I believe that for the euro area there is some risk of Japanification, but it is by no means a foregone conclusion"
- Europe needs to act comprehensively to avoid a deflationary malaise
- … " euro area still has space to do this, but time is not infinite"
- "This is why the ECB has been consistently calling for fiscal policy to play a stronger role"
