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Ex Bank of England Gov: American financial crisis imminent

Ex Bank of England Gov: American financial crisis imminent
April 12
13:33 2016

see url The former governor of the Bank of England, Mervyn King, believes that the next great financial crisis in America is right around the corner.a

“Another crisis is certain, and the failure…to tackle the disequilibrium in the world economy makes it likely that it will come sooner rather than later,” Mervyn King writes in his new book.

King stepped away from Bank of England in 2013, but during his tenure he oversaw U.K. monetary policy through the 2008 financial crisis. He writes of a “disequilibrium” in the world’s economy that has become worrisome. He further discusses the unsustainably high spending in Western countries compared to the unsustainability low spending in the East. This imbalance, he writes has led to low interest rates that have caused asset price inflation across the globe.

“Central banks are trapped into a policy of low interest rates because of the continuing belief that the solution to weak demand is further monetary stimulus,” he said. “They are in a prisoner’s dilemma: If any one of them were to raise interest rates, they would risk a slowing of growth and possibly another downturn.”

His new book, “The End of Alchemy” also discusses the euro zone sovereign debt crisis and bank reforms that have occurred since the financial crisis of 2008.

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