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INTERVIEW
What does practical mean? – we historical level of savings in countries
ask our interlocutor. such as Germany, Switzerland etc.,
where the households are traditionally
Dj. Gjuric: This means that the con- prone to savings, we see that this pro-
cept of targeted inflation which is be- pensity increased. In such a context,
ing applied for almost three decades the concept of targeted inflation does
is completely shaken due to the para- not have a valid argument to survive
doxes which were borne by the crisis. because the realized inflation rate for
More precisely speaking, the monetary many years has been below the tar-
policy turned out inefficient despite of geted one in most countries, and the
the many years of quantitative easing Eurozone suffers of chronic deflation.
which won different modalities, and Moreover, the “natural real interest
which were never allowed to be men- rate” fell to a level of only 1%.
tioned at professional, and even less,
scientific gatherings. Here, among oth- How should this tool, the interest
er things, I refer to the purchase of the rates, and the regime of targeting of
market by the central banks not only inflation be replaced?
of state but also of corporate bonds,
which was unimaginable before and it Dj. Gjuric: The central banks do not
was contradictory to the fundamental enjoy the autonomy they used to enjoy,
principles of running an efficient mon- neither they will enjoy it because they
etary policy. Thereby today the end of took their own space and they pun-
the injection of money does not pro- ished themselves with this fierce print-
trude, this time by the European Cen- ing money. The balances of the central
tral Bank, because the FED, after the banks, such as the FED, as the Bank
American economy, at least seemingly, of England, reached more than 22%
left the problems it had, announced in- of the GDP. In Japan it exceeded 45%,
creased of the reference interest rate, which explains how an absurd condi-
this time for the end of 2016. When it tion was reached: the expansive mon-
comes to the quantitative easing, the etary policy which was supposed to be
ECB reached the bottom by printing used to buy time has not been used by
additional 80 billion Euros per month, the political structures and the policy
however the market does not react. The makers in order to activate some other
banks want to strengthen the credit tools which would be in function of a
activity, however neither the corpora- desired long-term rate of economic
tions or the population do not want to growth.
borrow, this is only what the countries
want, the overindebted members of We are the witnesses of testing of
the Eurozone such as Greece, Italy, etc. different combinations of the mone-
tary policy, the fiscal policy, and other
The corporations do not react be- policies, and their inability to produce
cause they don’t see departure from an ambience where the rate of eco-
the path of accelerated economic nomic growth would follow a rapid
growth, on the contrary, most of them upward path, not with a return to the
expect that this will actually be a secu- historic rates because this is very un-
lar stagnation. Thereby secular means likely, depending on the region, one is
that they no longer see what is the ini- the story of the United States, the oth-
tial spark which would imply a new er of Europe, the third one of Japan,
wave of innovations, new wave of pro- and the fourth one of countries with
ductivity and creation of new products rising markets, but rather to return
and an increasing demand. The popu- to a level which is slightly higher than
lation moves in quite a contrary direc- the one from the period of the crisis.
tion. Savings increase due to the age For the United States, this means to
structure of Europe, and if we see the step out in the path of a rate of growth
November 2016 77
