If I use terminology reminiscent of the Depression era non-system, it is because I fear that in a world with weak aggregate demand, we may be engaged in a futile competition for a greater share of it. In the process, unlike Depression-era policies, we are also creating financial sector and cross-border risks that exhibit themselves when unconventional policies come to an end.
27 There is no use saying that everyone should have anticipated the consequences. As the former BIS General Manager Andrew Crockett put it, “financial intermediaries are better at assessing relative risks at a point in time, than projecting the evolution of risk over the financial cycle.” A first step to prescribing the right medicine is to recognize the cause of the sickness.