The sky is going to fall, not just yet.

Prof Vivek Dahejia writes that leaders of the US Federal Reserve, the European Central Bank and the Bank of Japan must be feeling like the 3 characters in a play from Jean-Paul Sartre, who were locked in a room with no exit for all of eternity, after death. Why? Because having embarked on a course of unconventional monetary policy they seem to be locked into it. They brought down interest rates to near zero, or ZIRP, then the ECB and Japan lowered that to negative, or NIRP, so that people would spend their money, rather keeping them in the bank because they are being charged for saving. Increased spending would lead to greater demand, which would lead to greater investment, financed by borrowing from banks which are loaded with cash because of the bond-buying program, known as quantitative easing. The central banks want to increase the rate of inflation because that reflects increased spending and demand, but nothing seems to be working. People are saving more to protect their pensions. Our previous Governor of the Reserve Bank, Raghuram Rajan warned of this back in 2014. There is now a contrarian view that restrictive monetary policy, or RIRP, might work. On 21 September the Fed voted to keep interest rate as it is, as predicted by Narayana Kocherlakota. There was hope that China will continue to grow strongly, pulling the rest of the world up with it. But the Beijing consensus turns out to have been a mirage, based on huge debt, excess of unusable infrastructure and falling productivity. Prof Ken Rogoff thinks that China is in for a calamitous "hard landing" which will hurt the global economy. India is too far behind to make a difference. Our share of nominal global GDP was 2.97% in 2015 and is projected to grow to 3.58% by 2020, the present growth rate being 7.26%. Prof Persaud thinks that asset prices are hugely over-inflated but the dollar index shows that the Fed is not about to raise interest rates any time soon. He thinks that one day the link between policy rates and the dollar index will stop working and that day will be chaotic. Recently the Deutsche Bank predicted that its recession indicators are flashing red for the US economy. So what about India? There is no debate about economic policy here. There is only one solution for everything, which is lower interest rate. Recently our Current Account Deficit almost turned into surplus. All of us would think that it is a good thing. If the nation is earning more from others than they are squeezing out of us that is very good. China, Japan South Korea have huge foreign exchange reserves and are doing very well but for us it is bad because it signals greater savings. But household savings are actually dropping. That is why we call ourselves 'Ram bharosey' which means 'God help'.