The argument goes that, at some point, monetary easing will suddenly give rise to hyperinflation, a collapse of the yen, a surge in interest rates, a plunge in bond prices, and so forth. 11 However, such fears are not at all likely to happen.
Recent studies found even lower thresholds at which financial deepening unleashes negative effects. In a Bank for International Settlements working paper, Cecchetti and Kharoubi found that the effects of credit on GDP growth turn negative once corporate debt exceeds 90 per cent – or household debt 85 per cent – of GDP.