Unlike past episodes in recent history, the crisis began in the world’s most sophisticated financial systems, causing widespread economic devastation. It stirred up persistent and formidable headwinds to economic growth, also making it very difficult for central banks to bring inflation back to target.
After this brutal wakeup call, economists went back and re-examined the possible role monetary policy plays in setting the stage for crises. Looking at the historical evidence, it would be fair to conclude that few, if any, crises have been caused by monetary policy alone.