The global economic crisis that started in 2008 is far from over, and we might not have seen the worst. Still, it’s not too early to think about how our response to the crisis might put the economy on course for the next one.
The defining feature of policy since the Great Recession began has been a fundamental shift in what we ask of elected governments on one side and unelected central banks on the other. Governments have failed, and are still failing, to get fiscal policy right. So, with varying degrees of reluctance, central banks have had to step in with quasi-fiscal measures, such as buying long-term government debt or absorbing risks previously borne by the private sector.
This reassignment of duties is no mere technicality. It’s a momentous and troubling development.
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