Thanks to the incompetence of global leaders and economists, the world faces a tough year in 2015, according to
Steve Forbes, chairman of Forbes Media.
In a new column, Forbes said many world leaders are guilty of "intellectual laziness."
"The astonishing inability of economists and political leaders to gauge what ails most economies these days and then promulgate the right cures is sad testimony to their obstinate refusal to look at facts and to their deep emotional adherence to bogus ideas," he wrote.
He noted parts of Europe are in an outright recession, along with Brazil and Japan, and China is "up to its neck in bad loans from its super-stimulus spending."
Forbes predicted that as the rest of the world continues to weaken, a still-punkish U.S. economy also is bound to be hurt.
"Here's where we come to the widespread application of economic malpractice — and on a scale not seen since the 1970s and 1930s," he said of the current global economy.
Forbes noted that central bank policies have been "about as helpful as doctors bleeding their patients in days of old."
"What ails the global economy is not the failure of central banks to churn out enough money; it's that their policies are constricting the flow of credit to small and new businesses," he argued.
Forbes includes the Federal Reserve among the offenders. "Credit has flowed disproportionately to the federal government at suppressed rates of interest." In his view, "plentiful reserves are useless to the economy if they can't be leveraged into new loans."
According to Forbes, the International Monetary Fund, the Fed, the European Central Bank and the central banks of Japan, England and other nations all believe erroneously — and despite historical evidence to the contrary — in the power of monetary manipulation.
"The idea that manipulating money can magically generate a genuine and durable economic prosperity is as wacky as believing that manipulating the number of parking tickets at an event influences the number of cars that will be manufactured," he noted
"The world economy is in for a rough year," Forbes predicted. "The political repercussions outside the U.S. will not be pretty."
Some believe the state of bond markets demonstrates that the global economy is still ailing.
"The world's richest nations are borrowing for free,"
Bloomberg reported.
In fact, the average 10-year bond yield of the U.S., Japan and Germany has fallen below 1 percent for the first time ever, according to Steven Englander, a foreign exchange strategist at Citigroup.
Englander told Bloomberg the rock-bottom rates show "that investors think we are going nowhere for a long time."
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