Central banks escape route from of boom and bust; John Plender

The widespread adoption of 2 per cent inflation targets has been, at best, a mixed blessing.

Conventional economic wisdom tells us that monetary policy has no lasting effects on the real economy. 

This simply does not square with what has happened in the era of financial deregulation which has been marked by repeated, ever  

William White, former economic adviser at the Bank for International Settlements, points out

https://www.ineteconomics.org/uploads/papers/WP_210-White-Monetary-Policy.pdf

that the first three of the four interest cycles we have seen since the late 1980s — ending in 1990, 2001, 2008 and 2020 — finished with a financial crisis

What we know for sure is that ultra-low interest rates after the 2007-09 financial crisis were morally hazardous, encouraging a huge increase in borrowing. 

Global debt rose from 280 per cent as a percentage of GDP in 2008 to nearly 360 per cent in 2021.  

Excessive monetary easing has had other unintended consequences. The world is at risk of severe financial instability whenever central banks raise rates.

John Plender Financial Times 1 November 2024

https://www.ft.com/content/72b48b7d-ec17-4135-aa40-98b96eec2e64

William White på denna blogg

https://englundmacro.blogspot.com/search?q=William+White%2C

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