Excessively tight fiscal policies in the U.S. and in the euro area are depressing economic growth and employment in nearly two-thirds of the industrialized world. These two economic systems also represent about 40 percent of the global economy.
At the same time, one-third of the world economy lives off its trading partners.
There, in the nutshell, is what is holding back demand, output and job creation on the global scale.
And these are the powerful headwinds the U.S. and euro area monetary policies are working against. A better understanding of these problems gives a very different perspective on the difficult tasks facing the U.S. Federal Reserve and the European Central Bank (ECB).
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.