In the “Big Read” column in the Financial Times of March 4, 2020, John Plender refers to my concern that post-crisis monetary policy has been “intensely morally hazardous”. Low interest rates and unconventional monetary policies have “set the stage for the next boom and bust cycle, fueled by ever declining credit standards and ever expanding debt accumulation”. COVID-19 could well be the trigger for the eventual “bust” phase to begin. If so, the magnitude and duration of the downturn might well exceed that expected from the economic consequences of the pandemic viewed in isolation.
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