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Central Bankers Will Bring Us Economic Stagnation

Central Bankers Will Bring Us Economic Stagnation



“Our country continues to face a difficult and challenging time….People have lost loved ones. Many millions have lost their jobs. There is great uncertainty about the future. At the Federal Reserve, we are strongly committed to using our tools to do whatever we can, for as long as it takes…to ensure that the recovery will be as strong as possible, and to limit lasting damage to the economy” –Jerome Powell, Chairman of the Federal Reserve, June 10, 2020

America is hurting. From a pandemic to a recession and mass unemployment to social unrest over the sadly still-present systemic racism in our institutions, our country’s future feels extraordinarily uncertain. Jerome Powell speaks to this above, and he is leading the Federal Reserve in taking an active role to try and mitigate the uncertainty. Perhaps the most important way in which the Fed is trying to mitigate uncertainty is through committing to near-zero interest rates for the foreseeable future. In his speech last week, Powell noted that there is no time horizon in which the Fed sees itself moving rates higher than zero and forecast 2022 as the earliest possible date for a rate hike. If the Federal Reserve persists with zero (or negative) interest rates for the foreseeable future, the American economy will be condemned to stagnation—like Europe and Japan before it—as capital flows away from productive investment and toward ever increasing debt payments.

Why would the Fed take this path? In short, this is the crisis playbook. The Fed appears to believe that zero or negative interest rates will stimulate the economy by encouraging consumers to spend now—as opposed to saving—and that increased spending will spark an economic recovery from the recession we find ourselves in. For this to work, the Fed is putting its faith in the textbook, straight-line relationship between interest rates and savings holding despite mounting evidence against it.

Long periods of zero and negative interest rates have been tried before—notably in Europe and Japan—and the results have been not just disappointing, but devastating. The evidence suggests that instead of ensuring a strong recovery and limiting lasting economic damage, zero or negative interest rates almost surely lead to a slow recovery and inflict significant long-term economic damage.

In Japan, the Bank of Japan moved to zero interest rates in the late 1990s and has barely budged since.Japan has not, however, had the strong, growing economy that this was intended to foster. Instead, it has experienced persistently low rates of growth on a declining trend, only touching the previously common 2 percent growth threshold twice in the nearly three decades since it brought rates down to near zero.The Japanese stock market hasn’t recovered either. Since interest rates hit the floor, its market has been range bound at a level below where it was prior to dropping interest rates.

The use of zero interest rates may have been necessary as a crisis-fighting tool when first introduced, but the persistent use of zero interest rates for the decades following have not led to any form of meaningful or sustainable growth—either in the real economy or in financial assets. Japan could be an anomaly, however, or other factors could be at play. It has an aging population, relies on manufacturing in an age increasingly dominated by services and technology, and has little to no natural resources to speak of, all of which may have weighed on growth. Let’s look at Europe as a second case study.

In Europe, we see the same exact story playing out as in Japan. Zero and negative interest rates were instituted later in Europe than in Japan—the European Central Bank did not dramatically lower interest rates until Europe was in the midst of the financial crisis of 2008, and it did not go to zero until the euro crisis in the early parts of last decade.There are no plans to increase rates in the eurozone, and many countries (including fiscally strong countries such as Germany) have even issued debt with negative interest rates over the last few years. This has had a similar effect on growth to what we saw in Japan.Growth in the eurozone has been on a consistent negative trend for decades, and the last decade of low interest rates has been especially difficult. European stock markets, which roughly reflect the underlying economic fundamentals, have fared similarly—the last fifteen years have seen modest asset price appreciation in many parts of the eurozone. The common thread between Europe and Japan is a longstanding policy of zero interest rates that has effectively ground their economies to a halt by crippling the banking sector. We can see this in part by looking at the profitability of the banks via a proxy—their share prices—during this time frame. A sample of the largest European banks over the last two decades paints a bleak picture for Europe’s banks.
euro bank shares prices yields Note: This chart contains data that was manually adjusted to account for differences in calendar days for which historical stock prices were available for each company.

As the chart shows, the European banking sector never recovered from the financial crisis, and has become less profitable today than it was two decades ago. Zero interest rates have constrained their ability to be profitable, along with increased regulation. Low interest rates make it difficult for banks to be profitable, as they typically earn a profit by borrowing at a low rate (such as that offered by a central bank), and lending at a higher rate. The difference reflects the risk the bank takes on as the lender in the transaction. Low rates, however, are associated with lower spreads than high rates, as money is in general cheaper and move available to borrowers when rates are low. As cheap money abounds, this constrains profits, because, as with any cheap good, competition increases and profit margins are slim.

The ability of the banks to generate profit isn’t just a problem for the banks. It’s a problem for the economy, because banks are a central engine behind economic growth. The less profitable the banks are, the less credit they are able to extend to you to start a business or buy a house. It is this ability to create and lend money to businesses and individuals that contributes significantly to economic growth by expanding investment in productive assets and increasing consumption. Further, economic expansion leads to lower unemployment, higher incomes, and a better standard of living. In short, weak banks are able to lend less, and leave the economy as a whole worse off. There isn’t an alternative to banks as the engine for economic growth. There are no battery-powered economies. Without the banks to grease the wheels of the economy, the whole system grinds to a halt, leading to increased unemployment and reduced incomes. This is what happened in 2008—the banks collapsed and dragged the economy down with them. This time, central bank policy has made it so the banks can’t stand up, and the economies of the eurozone and Japan have paid the price.

The situation is a little different in the United States. We have had rates near zero as well, but we also climbed back up above two percent last decade.Our economy has seen a slowdown in growth—particularly in the last five years—but our stock market had a record-setting decade.

While the growth story over the last decade is better than Europe’s or Japan’s, our recovery after 2008 has not seen meaningful and sustained increases in wages, and it has seen a steep drop-off in the labor force participation rate despite a generally low level of unemployment, suggesting an incomplete or weak recovery.

Some of this weakness may be explained by the stagnation of our corporations, which have taken on extraordinary debt levels as a result of the many years of easy money policies since the financial crisis. Capital has been increasingly diverted from productive uses—such as investing in new technology or hiring new workers—to paying off increasingly large debt burdens.By keeping rates near or below zero for the foreseeable future, the Fed is granting already overly indebted companies access to more capital (at as low a rate as possible) to stay alive during the current recession. This will do the trick in the short run, but in the long run it will leave a substantial number of corporations alive but on life support, zombie companies that are increasingly unable to do anything with their cash flows but pay down the mountains of debt that they owe. Thus, committing to a policy of zero or negative interest rates for an extended period of time—as Powell did last week—will in all likelihood lead us down the same path as Europe and Japan. It will not lead to more spending and a higher growth rate. Instead, it will erode the profitability of the banks; ensure zombie corporations use cash flows to pay off debt rather than to invest, increase wages, and hire additional workers; and ultimately condemn America to a broken economy with little to no endogenous growth potential.

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Sex work is real work: Global COVID-19 recovery needs to include sex workers

Societally, we need to recognize that sex workers have agency and deserve the same respect, dignity and aid as any other person selling their labour.



Globally, sex workers have been left to fend for themselves during the pandemic with little to no support from the government. (AP Photo/Bikas Das)

During the pandemic, business shifted from in person to work-from-home, which quickly became the new normal. However, it left many workers high and dry, especially those with less “socially acceptable” occupations.

The pandemic has adversely impacted sex workers globally and substantially increased the precariousness of their profession. And public health measures put in place made it almost impossible for sex workers to provide any in-person service.

Although many people depend on sex work for survival, its criminalization and policing stigmatizes sex workers.

Research shows that globally, sex workers have been left behind and in most cases excluded from government economic support initiatives and social policies. There needs to be an intersectional approach to global COVID-19 recovery that considers everyone’s lived realities. We propose policy recommendations that treat sex work as decent work and that centre around the lived experiences and rights of those in the profession.

Sex work and the pandemic

The United Nations Population Fund (UNFPA) recently reported that apart from income-loss, the pandemic has increased pre-existing inequalities for sex workers.

In a survey conducted in Eastern and Southern Africa, the UNFPA found that during the pandemic, 49 per cent of sex workers experienced police violence (including sexual violence) while 36 per cent reported arbitrary arrests. The same survey reported that more than 50 per cent of respondents experienced food and housing crises.

Lockdowns and border closures adversely impacted Thailand’s tourism industry which relies partially on the labour of sex workers.

Read more: Sex workers are criminalized and left without government support during the coronavirus pandemic

In the Asia Pacific, sex workers reported having limited access to contraceptives and lubricants along with reduced access to harm reduction resources. Lockdowns also disrupted STI or HIV testing services, limiting sex workers’ access to necessary healthcare.

In North America, sex workers have been excluded from the government’s recovery response. And many began offering online services to sustain themselves.

A woman stands backlit next to a dimly lit bus that reads 'Thailand' with green lighting.
Sex workers stand in a largely shut-down red light area in Bangkok, Thailand on March 26, 2020. (AP Photo/Gemunu Amarasinghe)

Government vs. community response

Globally, sex workers have been left to fend for themselves during the pandemic with little to no support from the government. But communities themselves have been rallying.

Elene Lam, founder of Butterfly, an Asian migrant sex organization in Canada, talks about the resilience of sex wokers during the pandemic.

She says organizations like the Canadian Alliance for Sex Work Law Reform are working in collaboration with Amnesty International to mobilize income support and resources to help sex workers in Canada.

Organizations in the United Kingdom, Germany, India and Spain have also set up emergency support funds. And some sex worker organizations have developed community-specific resources for providing services both in person and online during the pandemic.

Global recovery needs to include sex workers

The International Labour Organization’s “Decent Work Agenda” emphasizes productive employment and decent working conditions as being the driving force behind poverty reduction.

Sociologist Cecilia Benoit explains that sex work often becomes a “livelihood strategy” in the face of income and employment instability. She says that like other personal service workers, sex workers also should be able to practice without any interference or violence.

In order to have an inclusive COVID-19 recovery for all, governments need to work to extend social guarantees to sex workers — so far they haven’t.

As pandemic restrictions disappear, it is crucial to ensure that everyone involved in sex work is protected under the law and has access to accountability measures.

A woman stands wearing a mask with a safety vest on in front of a collage of scantily clad women and a sign that reads 'nude women non stop'
A volunteer helps out at Zanzibar strip club during a low-barrier vaccination clinic for sex workers in Toronto in June 2021. THE CANADIAN PRESS/Frank Gunn


As feminist researchers, we propose that sex work be brought under the broader agenda of decent work so that the people offering services are protected.

  1. Governments need to have a legal mandate for preventing sexual exploitation.

  2. Law enforcement staff need to be trained in better responding to the needs of sex workers. To intervene in and address situations of abuse or violence is critical to ensure workplace safety and harm reduction.

  3. Awareness and educational campaigns need to focus on destigmatizing sex work.

  4. Policy-makers need to incorporate intersectionality as a working principle in identifying and responding to the different axes of oppression and marginalization impacting LGBTQ+ and racialized sex workers.

  5. Engagement with sex workers and human rights organizations need to happen when designing aid support to ensure that an inclusive pathway for recovery is created.

  6. Globally, there needs to be a steady commitment towards destigmatizing sex workers and their services.

Despite the gradual waning of pandemic restrictions, sex workers continue to face the dual insecurity of social discrimination and loss of income support. Many are still finding it difficult to stay afloat and sustain themselves.

Societally, we need to recognize that sex workers have agency and deserve the same respect, dignity and aid as any other person selling their labour.

The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.

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OU researchers award two NSF pandemic prediction and prevention projects

Two groups of researchers at the University of Oklahoma have each received nearly $1 million grants from the National Science Foundation as part of its…



Two groups of researchers at the University of Oklahoma have each received nearly $1 million grants from the National Science Foundation as part of its Predictive Intelligence for Pandemic Prevention initiative, which focuses on fundamental research and capabilities needed to tackle grand challenges in infectious disease pandemics through prediction and prevention.

Credit: Photo provided by the University of Oklahoma.

Two groups of researchers at the University of Oklahoma have each received nearly $1 million grants from the National Science Foundation as part of its Predictive Intelligence for Pandemic Prevention initiative, which focuses on fundamental research and capabilities needed to tackle grand challenges in infectious disease pandemics through prediction and prevention.

To date, researchers from 20 institutions nationwide were selected to receive an NSF PIPP Award. OU is the only university to receive two grants to the same institution.

“The next pandemic isn’t a question of ‘if,’ but ‘when,’” said OU Vice President for Research and Partnerships Tomás Díaz de la Rubia. “Research at the University of Oklahoma is going to help society be better prepared and responsive to future health challenges.”

Next-Generation Surveillance

David Ebert, Ph.D., professor of computer science and electrical and computer engineering in the Gallogly College of Engineering, is the principal investigator on one of the projects, which explores new ways of sharing, integrating and analyzing data using new and traditional data sources. Ebert is also the director of the Data Institute for Societal Challenges at OU, which applies OU expertise in data science, artificial intelligence, machine learning and data-enabled research to solving societal challenges.

While emerging pathogens can circulate among wild or domestic animals before crossing over to humans, the delayed response to the COVID-19 pandemic has highlighted the need for new early detection methods, more effective data management, and integration and information sharing between officials in both public and animal health.

Ebert’s team, composed of experts in data science, computer engineering, public health, veterinary sciences, microbiology and other areas, will look to examine data from multiple sources, such as veterinarians, agriculture, wastewater, health departments, and outpatient and inpatient clinics, to potentially build algorithms to detect the spread of signals from one source to another. The team will develop a comprehensive animal and public health surveillance, planning and response roadmap that can be tailored to the unique needs of communities.

“Integrating and developing new sources of data with existing data sources combined with new tools for detection, localization and response planning using a One Health approach could enable local and state public health partners to respond more quickly and effectively to reduce illness and death,” Ebert said. “This planning grant will develop proof-of-concept techniques and systems in partnership with local, state and regional public health officials and create a multistate partner network and design for a center to prevent the next pandemic.”

The Centers for Disease Control and Prevention describes One Health as an approach that bridges the interconnections between people, animals, plants and their shared environment to achieve optimal health outcomes.

Co-principal investigators on the project include Michael Wimberly, Ph.D., professor in the College of Atmospheric and Geographic Sciences; Jason Vogel, Ph.D., director of the Oklahoma Water Survey and professor in the Gallogly College of Engineering School of Civil Engineering and Environmental Science; Thirumalai Venkatesan, director of the Center for Quantum Research and Technology in the Dodge Family College of Arts and Sciences; and Aaron Wendelboe, Ph.D., professor in the Hudson College of Public Health at the OU Health Sciences Center.

Predicting and Preventing the Next Avian Influenza Pandemic

Several countries have experienced deadly outbreaks of avian influenza, commonly known as bird flu, that have resulted in the loss of billions of poultry, thousands of wild waterfowl and hundreds of humans. Researchers at the University of Oklahoma are taking a unique approach to predicting and preventing the next avian influenza pandemic.

Xiangming Xiao, Ph.D., professor in the Department of Microbiology and Plant Biology and director of the Center for Earth Observation and Modeling in the Dodge Family College of Arts and Sciences, is leading a project to assemble a multi-institutional team that will explore pathways for establishing an International Center for Avian Influenza Pandemic Prediction and Prevention.

The goal of the project is to incorporate and understand the status and major challenges of data, models and decision support tools for preventing pandemics. Researchers hope to identify future possible research and pathways that will help to strengthen and improve the capability and capacity to predict and prevent avian influenza pandemics.

“This grant is a milestone in our long-term effort for interdisciplinary and convergent research in the areas of One Health (human-animal-environment health) and big data science,” Xiao said. “This is an international project with geographical coverage from North America, Europe and Asia; thus, it will enable OU faculty and students to develop greater ability, capability, capacity and leaderships in prediction and prevention of global avian influenza pandemic.”

Other researchers on Xiao’s project include co-principal investigators A. Townsend Peterson, Ph.D., professor at the University of Kansas; Diann Prosser, Ph.D., research wildlife ecologist for the U.S. Geological Survey; and Richard Webby, Ph.D., director of the World Health Organization Collaborating Centre for Studies on the Ecology of Influenza in Animals and Birds with St. Jude Children’s Research Hospital. Wayne Marcus Getz, professor at the University of California, Berkeley, is also assisting on the project.

The National Science Foundation grant for Ebert’s research is set to end Jan. 31, 2024, while Xiao’s grant will end Dec. 31, 2023.

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Prevalence of gender-diverse youth in rural Appalachia exceeds previous estimates, WVU study shows

Gender-diverse youth are at an increased risk of suicide and depression, according to the Centers for Disease Control and Prevention. But the prevalence…



Gender-diverse youth are at an increased risk of suicide and depression, according to the Centers for Disease Control and Prevention. But the prevalence of gender diversity is largely unknown—especially in rural areas, where studies of the topic are rare. 

Credit: WVU Photo/Sean Hines

Gender-diverse youth are at an increased risk of suicide and depression, according to the Centers for Disease Control and Prevention. But the prevalence of gender diversity is largely unknown—especially in rural areas, where studies of the topic are rare. 

To fill that knowledge gap, researchers at West Virginia University— along with their colleagues at the University of Washington and Boise State University — surveyed junior high and high school students in rural Appalachia about their gender identity. They asked about the students’ internal sense of being male, being female or having another identity, like nonbinary. They found that more than 7% of young people surveyed shared a gender identity that did not fully align with the sex they were assigned at birth.  

These findings were published in JAMA Pediatrics.

Being gender diverse, including being transgender, nonbinary or having another gender identity that doesn’t match the sex assigned at birth, is not a medical concern and is considered a normal part of human experience, according to the American Academy of Pediatrics. 

Even though gender diversity isn’t an illness, some young people who are gender diverse experience distress when their gender doesn’t align with their physical characteristics or treatment in society. This distress, called “gender dysphoria,” can be associated with higher rates of depression or even thoughts of self-harm, prior research suggests.

“We have a lot of studies that suggest gender-diverse youth are two to four times as likely to experience depression and thoughts of self-harm as their cisgender peers, or young people whose sex assigned at birth and gender identity fully align,” said WVU School of Medicine researcher Dr. Kacie Kidd, who co-authored the study. “This is an area where we need to do more research. We need to better understand how to support these young people, especially now that we are increasingly recognizing that they are here and would likely benefit from the support.”

Other study authors include Alfgeir Kristjansson, an associate professor with the WVU School of Public Health; Brandon Benton, a nurse with WVU Medicine; Gina Sequeira, of the University of Washington; and Michael Mann and Megan Smith, of Boise State University. 

Few studies have asked young people directly about their gender identity. 

A 2017 study suggested that West Virginia had the highest per capita rate of transgender youth in the country at just over 1%. 

“Prior studies have used less inclusive questions when asking young people about their identity,” said Kidd, an assistant professor of pediatrics and internal medicine. “We suspected that this underestimated the prevalence of gender-diverse youth.” 

She and her colleagues had previously asked these more inclusive questions to young people in Pittsburgh, a city in Appalachia. Nearly 10% of youth in that sample reported having a gender-diverse identity. 

“Despite the high prevalence of gender-diverse identities found in our Pittsburgh study, information about rural areas was still unknown,” Kidd said. “We suspect that many of the young people in rural Appalachia who shared their gender-diverse identities with us in this study may benefit from additional support, especially if they do not feel seen and supported at home and in their community.” 

This new study is one of many to recognize that researchers interested in gender diversity face a dearth of data when it comes to rural areas.  

It’s also one of many studies to recognize that gender-diverse individuals can face a scarcity of health care options, affirming social networks and other forms of support in those same rural areas.

For example, in a recent study led by Megan Gandy, BSW program director and assistant professor at the WVU School of Social Work, up to 61% of participants said they had to travel out of West Virginia to access gender-related care.

And another recent study conducted by Zachary Ramsey, a doctoral candidate in the WVU School of Public Health, found that rural areas could present unique barriers to sexual and gender minorities. 

Those barriers included discrimination and heteronormativity — or, the belief that a heterosexual and cisgender identity is the only “normal” one. They also included a lack of training for health care providers in handling LGBTQ concerns.

“Adolescent mental health is at a crisis point, according to the Centers for Disease Control,” Kidd said. “We have an access concern because so many young people need mental health services nationwide and we just don’t have enough mental health professionals to meet that need. It’s a growing problem and certainly gender-diverse youth are at an even greater risk.” 

In CDC data, the number of adolescents reporting poor mental health has increased, especially during the COVID-19 pandemic. Support from parents, schools, communities and health care providers has been associated with improved mental health outcomes, especially for gender-diverse youth.  

“Gender-diverse youth are incredible young people, and — as our study found — many of them live in rural areas,” Kidd said. “It is important that we ensure they have access to support so that they are able to thrive.”

Citation: The prevalence of gender-diverse youth in a rural Appalachian region”

Research reported in this publication was supported by the Centers for Disease Control and Prevention under Award Number U48DP006391 and the Agency for Healthcare Research and Quality under Award Number 5K12HS02693-03. The content is solely the responsibility of the authors and does not necessarily represent the official views of CDC or AHRQ.

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