The current bust has been made worse by previous periods of easy money, which destroyed the wealth creation that is critical to sustaining a growing economy.
It is fundamentally wrong to put the entire economy at the service of a single goal and to commit to a single solution. Human action always involves weighing up different goals and different means.
The COVID-19 panic may have sped up the beginning of this economic crisis, but the virus wasn’t the cause. The real cause of the crisis was the boom that came before it.
From New York to London to Brussels to Tokyo, central banks in the last two weeks have embraced a wide variety of extraordinary inflationary measures to prop up insolvent banks and governments.
The Fed's portfolio is now 35 percent larger from the time the Fed promised to "taper" back its portfolio and "normalize." It is increasingly clear that there will not be any normalization. Ever.
Contrary to Fed assumptions, we are not presently facing a problem of liquidity vis-à-vis Great Recession; we are confronted, instead, with a serious shortage of quality collateral.
