But again, with inflation having been low and stable for more than two decades now, it can be seen as essentially a one-off factor that has probably run its course. My third category of forces are those associated with the cyclical dynamics of credit and asset prices.
The financial sector has a well-documented capacity to engage in bouts of overexpansion, driven by self-reinforcing expectations and followed by periods of readjustment and consolidation. Credit cycles of this nature can be unpredictable in duration, ranging from the short and sharp to longer episodes spanning a decade or more.