Lord Keynes describes the world before the First World War as “economic Eldorado” or “economic Utopia,” where a middle-class Londoner could easily “order by telephone...the various product of the whole earth,” “adventure his wealth...in any quarter of the world,” and “secure...cheap and comfortable means of transit to any country.” Furthermore, this state of affairs was regarded “as normal, certain and permanent, except in the direction of further improvement.” Whenever I read this passage, I am always struck by the power of globalization in bringing about economic prosperity, the ephemeral quality of such achievement in the light of the two World Wars, and the parallel with our experiences leading to the Great Financial Crisis.
1  Keynes, John Maynard, The Economic Consequences of the Peace, 1919. BIS central bankers’ speeches  1  I. The changing economy and central banking  In our current discourse on economic policy, or more broadly the whole economy, no one would doubt the critical stabilizing role played by central banks.