Don't cool the world growth jets too early

The risks now are not on the side of cooling too early. Instead, they are on the side of pending worldwide inflation. In the new competitive loosing monetary policies internationally (at least in major western industrialised countries including the US and EU, and now Japan has joined), would any stimulating policies of such type have any effect on the real economies in those countries and the world as a whole? (Don't cool the world growth jets too early, January 29.)
The effects of loosing monetary policy in all the countries when they already face the liquidity trap are likely to be no effects on real outputs of those economies.
In the short run, they may boost assets prices such as the stock markets and cause hot money to flow to the major emerging economies to cause headaches to their economies. In return, the authorities in those countries will have to respond by taking measures to keep their exchange rates not rising too much.
In the longer term, international inflations are likely to rise significantly, causing policy makers headaches and forcing costly adjusts.
The world economy is having a wild run in the near future. In such a worldwide monetary policy game to compete with each other, who will be the winners and who will be the losers are unclear.
The game started with the Fed.
The skills for relatively good policies in a country to win the game eventually are required not only for this stage of monetary easing, but also for the period in its wake to combat inflation and to continually stay internationally competitive.
In that sense, your concluding sentence is very insightful: “These market trends appear to be sustainable as the sensible policy makers have thrown their text books and ideologies out of the window and are willing to have policy settings that have, in broad terms, averted economic depression and are working to support economic growth.”
Australian authorities have to and must be ready for this.

The US Bureau of Labour Statistics provide 6 different numbers for unemployment , and this Spectator [SK] has chosen the U3 number where a person having one hour of work per week is counted as employed, and those of employable age that have given up looking for work are not counted as unemployed (Don't cool the world growth jets too early, January 29).
A more realistic statistic is the U6 number where the people mentioned above are counted as unemployed.
U6 unemployment has dropped from 17.1% in April 2010 to 14.4% in December 2012.
One can only wonder that the US BLS provide these statistics so that economists working for the government can quote the smaller number U3 and those looking for the actual truth of the situation can use the more realistic number U6.

Stock markets have rallied to far and something needs to be done tp bring them into check, otherwise they will eventually simply crash again causing the same problema sll over again (Don't cool the world growth jets too early, January 29).