In 2008, massive infusion of liquidity was seen as the best bet. Indeed, in uncharted waters, erring on the side of caution meant providing the system with more liquidity than considered adequate. This strategy was effective in the short-term, but with hindsight, we know that excess liquidity may have reinforced inflation pressures.
Chart 3: Household debt has risen to elevated levels in Canada and the G7 Aggregate household debt as a percentage of GDP, quarterly data  % 110 100 90 80 70 60 50  1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016  Canada  G7, excluding Canada (PPP GDP weighted) Last observation: 2017Q2  Source: Bank for International Settlements  Chart 4: High levels of G7 public debt are a legacy of post-crisis fiscal stimulus General government gross debt as a percentage of GDP, annual data % 130 120 110 100 90 80 70 60 2000  2004 Canada  Source: International Monetary Fund via Haver Analytics  2008  2012  2016  G7, excluding Canada (PPP GDP weighted) Last observation: 2017  - 11 -  Chart 5: Real interest rates have declined since 1990 Long-term real government bond yields in advanced economies, quarterly data % 9  6  3  0  -3 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016  Canada  G7, excluding Canada (PPP GDP weighted)  Sources: Bloomberg and Consensus Economics  Last observation: 2017Q4  What about our tools?