World economy may be slipping into 1930s Great Depression problems: RBI's Raghuram Rajan - The Ec...

Log In / Join

Indiatimes The Times of India The Economic Times More

FOLLOW ET:

LATEST NEWS >

< >

05:35 PM: IPL spot-fixing: Delhi court drops all charges agains...

Indicators
Home
Agriculture

News
Finance

Defence
Foreign Trade

05:02 PM: Union Minister Babul Supriyo questions utility of Mam...

04:58 PM: MP government to launch insurance scheme for scribes ...
Company

Industry

Indicators

Economy

Infrastructure

Politics and Nation

International

Nestle will try to win

India's confidence back
Suresh Narayanan

India Unlimited

18

More

Policy
Search for News, Stock Quotes & NAV's

You are here: ET Home News Economy Indicators

World economy may be slipping into

1930s Great Depression problems:
RBI's Raghuram Rajan
By ET Bureau | 27 Jun, 2015, 02.17AM IST

Post a Comment

18

READ MORE ON World economy | RBI | Raghuram Rajan | Market | London Business School | India | Great
Depression of the 1930s
2/2.5/ 3 BHK in Mumbai
www.runwalforests.com/ - Luxe homes in Kanjurmarg
from 1.20CR. Live in the arms of nature
Ads by Google

MUMBAI: When Raghuram Rajan warned

about a looming financial market crisis a
decade ago, former US Treasury Secretary
Lawrence Summers said he was being
'Luddite'. In the event, Rajan was right.
Now the Reserve Bank of India governor is
sounding the alarm again the very
efforts of central banks in the developed
world to avoid another Great Depression by
keeping interest rates at zero may lead to
precisely that outcome.
But this time around, there seem to be few
dissenting voices. "I do worry that we are
slowly slipping into the kind of problems
that we had in the thirties in attempts to
activate growth," Rajan told an audience at
the London Business School on Thursday.
"And, I think it's a problem for the world. It's
not just a problem for the industrial
countries or emerging markets, now it's a
broader game."

Rajan expressed concern that the world may be slipping into

the kind of problems of the depression of the 1930s and an
international consensus was needed.

POLL
RBI Governor: World may slip into 1930
Depression problems. Agree?
Yes

No

Can't say

Enter the
code shown

Vote

ET SPECIAL: Love visual aspect of news? Enjoy

this exclusive slideshows treat!

The RBI Governor, although soaked in the free-market principles of the Chicago School,
has been advocating against the unconventional monetary policies of the US Federal
Reserve and the European Central Bank.
Like

Share 3,277,147 people like this. Sign Up to see

what your friends like.

SPOTLIGHT

IMF as Global Regulator

Their zero lower-bound interest rates are distorting markets and countries are turning
protectionist, which may require the IMF to take up the role of an international regulator.
"We need rules of the game in order to effect a better solution," the Press Trust of India
cited him as saying. "I think it is time to start debating what should the global rules of the
game be on what is allowed in terms of central bank action. I am not going to venture a

7/25/2015

Page 1 of 7

World economy may be slipping into 1930s Great Depression problems: RBI's Raghuram Rajan - The Ec...

Rebooting with Windows 10

guess as to how we establish new rules of the game. It has to be international discussion,
international consensus built over time after much research and action."
Despite rates at zero in developed economies from the US to the euro zone and Japan,
economic growth remains anaemic and unemployment high. But the poor return on fixedincome securities has led to capital chasing yields into developing economies, pushing up
the value of their currencies. To protect their competitiveness, some like India are
intervening in markets and others suggest capital controls.Such actions and reactions by
policy markets could lead to a situation similar to the 1930s when protectionist policies led
to a compression in global trade and overall demand for products. It took decades for the
world economy to recover.

Microsoft aims to reboot

relations with Windows 10
Microsoft is making a new version of
Windows available free as an upgrade to

"The question is are we now moving into a territory in trying to produce growth out of

anyone using either of prior two generations

nowhere or we are in fact shifting growth from each other, rather than creating growth,''
said Rajan. "Of course, there is past history of this during the Great Depression when we

of the system.
5 useful Windows 10 features that small
businesses will love

How to get smart Windows 10 features

on Windows 8.1

Most
Read

Most
Shared

got into competitive devaluation."

Most
Commented

World economy may be slipping into 1930s Great

Depression problems: RBI's Raghuram Rajan
Rose Valley Groups CMD Gautam Kundu has 150
cars, 3,078 bank accounts and more: ED
No invention, earth shaking idea from India in 60
years: NR Narayana Murthy
For the first time, India uses 'right to reply' to cut
short Pak's Kashmir blame game
Government plans to cap premature withdrawal of
PF money at 75% of total amount
More

Not to be Missed
Say sorry to Sushma Swaraj or
face suit, Nitin Gadkari tells
Rahul Gandhi

Modi government launches

scathing counter attack; targets
7 'graft-tainted' Congress-ruled
states

7/25/2015

Page 2 of 7