Monetary Stimulus Not Enough for Lack of Demand

New York, Oct. 5 (Jiji Press)--Monetary stimulus steps are not
enough to address a lack of global aggregate demand, Nobel Prize-winning
economist Joseph Stiglitz said Tuesday.
"Will the policy of quantitative easing suffice to solve the
problems of inadequate global aggregate demand? The answer is clearly no,"
the Columbia University professor said at a press conference.
"Lowering interest rates may help a little bit, but is much too
weak to address the problems facing the U.S. and Europe," Stiglitz said.
"The answer is we need a fiscal stimulus."
His comments came after the Bank of Japan announced additional
easing steps earlier in the day. The BOJ effectively revived the zero
interest rate policy and unveiled a plan to buy 5 trillion yen in government
securities, exchange-traded funds, real estate investment trust funds and
other assets.
On the currency front, Stiglitz said, "It is very clear that Japan
was facing a severe exchange rate appreciation that was hurting its
exporters." It was "natural" for Japan to attempt to guide the yen lower, he
also said.
The yen's rise was "caused in part by the flood of liquidity from
the U.S. Federal Reserve and the European Central Bank to some extent," he
said, blaming the institutions for creating problems all over the world.