See Bernanke, B., Bertaut, C., Pounder DeMarco, L. and Kamin, S. (2011), “International Capital Flows and the Returns to Safe Assets in the United States, 2003–2007”, Board of Governors of the Federal Reserve System International Finance Discussion Paper, No 1014, February. 7 This taxonomy comes from Gelpern, A. and Gerding, E. (2016), “Inside Safe Assets”, Yale Journal on  Regulation, Vol.
This doesn’t just generate the wrong incentives, as I mentioned earlier. Above all, it costs a lot of money. Look at Ireland, for example: rescuing its banks raised the country’s 2010 budget deficit to more than 30% of GDP.