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Aruba, March 15, 2016 - It has become fashionable to lament that central banks have run out of ammo. While this may be true in some sense, we believe it also obscures the underlying issue — monetary policy intervention is not always the best remedy for an ailing global economy. 

In particular, it's time for policymakers to broaden their horizons beyond interest rate cuts towards more meaningful structural and fiscal reforms. After more than seven years of monetary policy intervention, capped by recent shifts from several central banks towards negative interest rates, the economic and investment outlook is murky at best.
This is evident in any number of countries around the world. The move to negative rates has coincided with the falling yields on the 10-year Japanese and German government bonds, proving the diminishing marginal returns of rate cuts. If investors felt that rate intervention was going to be effective in stimulating the economy, we would have seen an increase (rather than a decrease) in the cost of long-term bonds relative to short-term interest rates (a steepening of the yield curve) as they priced in higher levels of growth and/or inflation. 
(Remember — when bond prices rise, interest rates decrease, and bond prices typically rise when the debt is perceived to be low-risk). 
Things have not worked out that way and there is a clear reason why. Monetary policy intervention, which has now led to negative interest rates, is a continuation of competitive (currency) devaluation pursued by central banks that are attempting to get a larger slice of the global pie without growing the pie itself. Ultimately, everyone cannot get a larger slice of the economic pie without growing global output.