By conducting a monetary policy of extremely low interest rates, combined with exceptional measures such as bond purchases, are we stoking asset price bubbles and encouraging too risky lending practices by banks? Very low interest rates may encourage risk taking by the investors. This is actually one of the objectives. Our economies need more productive investments.
The technical term for this kind of path dependence is ‘hysteresis’. Another way to describe it might be that ‘extinction is forever’. There was a background trend of increased school retention, but it’s amazing how that effect was so concentrated in recessions and their aftermath. There’s a gender angle here, too, because the effect is starker for males than females.