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.
Extreme monetary easing, in my view, is more cause than medicine. The sooner we recognize that, the more sustainable world growth we will have. References Acharya, V, Marco Pagano and Paolo Volpin (2013), Seeking Alpha: Excess Risk Taking and Competition for Managerial Talent, NBER Working Paper 18891. Becker, Bo and Victoria Ivashina (2012), “Reaching for Yield in the Bond Market”, NBER working paper 18909.