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'It's not working': Why the old economic rules don't add up any more: 4DBC 4D Business Consulting

There's a Sophocles quote about the perils of knowledge. "How terrible is wisdom when it brings no profit to the wise," he wrote, with the generally grim outlook of a Greek tragedian.

It's a timely reminder — as you read through the business pages and pore over the blogs and scratch your head at Twitter's hot take du jour — to wonder where wisdom lies in this economic beat. These are particularly murky times for our economy, when even the wisest among us are often flummoxed. Some of our best and most reliable economic indicators are awash in contradictions. Whether it's our GDP grinding along at meagre levels, or wildly volatile jobs figures or manufacturing data, the picture that emerges is foggy.

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"The economy today is much more confusing than it used to be," says Benjamin Tal, deputy chief economist with CIBC World Markets. "We used to have a normal economic cycle where the economy goes up, inflation goes up, you raise interest rates, you go into a recession and then you cut interest rates and everything goes back to normal."

"Now we have a situation where it's not working," he says.

Policy-makers from Tokyo, Frankfurt and Washington have tried everything to spark a recovery. After traditional methods didn't work, they turned to modern-day central bank alchemy — everything from negative interest rates to quantitative easing. And still, eight years after the great recession, the global economy remains stuck in the mud.


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