Efficacy of central banking stalls

Economic outlook bleak amid slow growth, reluctant spending

Central bankers opened their annual conference in Jackson Hole, Wyoming, Thursday to a global landscape that remains bleak.

Growth is sluggish. Inflation barely registers. Businesses won’t invest. And consumers remain mostly hunkered down eight years after a financial crisis that jolted central banks to take radical steps in the first place.

Far from stepping up spending, many people and businesses have instead been saving money despite essentially zero interest. Economists warn that the easy-money policies are losing effectiveness over time — and might even make things worse.

“It’s pushing on a string if you’re trying to get people who are already living in a borderline recession economy, who are already up to their eyeballs in debt, to borrow more,” says Mark Blyth, a professor of international political economy at Brown University.

The central banks’ extraordinary efforts weren’t meant to be permanent. They were designed to restore confidence in a banking system that was teetering in 2008 and then to counter the deepest recession since the 1930s.

By all accounts, they managed to ease panic and rescue the world’s advanced economies. But the United States, and especially Europe and Japan,