How to Boost the Global Economy? Higher Oil Prices, Goldman Says

24 Nov 2016   Economy, Prices

Forget the stagflation of the 1970s. Higher oil prices would be a boon for the global economy, according to Goldman Sachs Group Inc. Pricey crude means economies such as Saudi Arabia take in more money than they can spend, which financial markets help distribute through the rest of the world, boosting asset values and consumer confidence, the bank’s analysts Jeff Currie and Mikhail Sprogis wrote in a Nov. 22 research note. It’s a counter-intuitive notion, especially for anyone who lived through the 1970s, when Middle East turmoil hiked oil prices and pushed much of the developed world into recession. Back then, high oil prices meant money flowed from developed economies where consumption was high to emerging economies where consumption was low, taking money out of circulation and stagnating the economy. Things changed in the 2000s, Currie and Sprogis wrote. Modern financial systems took savings that were building up in […]

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