A korrentour reading

A central bank can eliminate a self-fulfilling ('sunspot') debt crisis simply by credibly committing to buy as many bonds as needed at the low interest rate.

What is a korrent?

A korrent — “current”, with a K — is our reading of what someone said: one sentence, drawn from their own words below. People put the same thought in different words; a korrent tries to name the thought they share, so that what several people mean can be set side by side, and followed as it changes.

It is an approximation, and it is ours. The quotes are theirs, word for word, and where the two differ, the quote is the fact. Read more →

What Olivier Blanchard actually said

Word for word, from things they published elsewhere, each linked to where it was said. They did not write this page. Something wrong here? Tell us.

OB
Olivier Blanchard 1 Jun 2022

This is precisely the role the central bank can play. By announcing that it stands ready to buy the bonds that investors want to sell at the price associated with the low interest rate, and credibly indicating that it has deep enough pockets to buy whatever is needed, it can eliminate the bad equilibrium.

↗Fiscal Policy under Low Interest Ratesdirect.mit.edu

First recorded here 1 Jun 2022 · How quotes work

Do you hold this korrent?

Related korrents

Our reading — they may agree, disagree or merely touch the same thing.

See this on the map →