David Kelly is the chief global strategist at JPMorgan's $1.9 trillion asset management business and recently stated that low interest and monetary stimulus have held back the global economy for years, and could be setting the stage for 10-15 years of slowing growth in the future, according to Business Insider.
Low rates and easing has started to decrease economic growth and negatively affecting corporate profits and stock prices. Investors have been praising the fed and the market has shown the result. All major indices have been at all-time highs following the easing of trade war tensions and the Fed's rate cut.
"Any medicine, taken to extreme, turns into a poison," Kelly said. "There is this assumption out there that monetary stimulus is becoming less effective over time. But it actually quite possible that it is not just less effective, it is actually counterproductive."
Kelly listed three arguments detailing how the rate cut will negatively affect the future economy. The first is that lower rates help the housing and manufacturing sectors, which are fairly small sectors compared to the overall U.S. economy. The second is that the promise of low rates has been eroding demand and spending for years, which slows growth. Lastly, Kelly argues that the rate cuts reinforce the belief that the economy is vulnerable which hurts confidence.
David Kelly listed three reasons why he believes the Fed's rate cuts will negatively affect the future growth of the U.S. economy.