Skip to Content

Excessive credit leads to crash… so expand credit again?

Martin Wolf in today's Financial Times puts the Federal Reserve's "quantitative easing", as well as other countries' monetary expansions, into perspective:

Monetary policy has worked, in practice, via credit expansion. It is, as a result, at least partly responsible for the debt crisis of today. Who can now confidently state that reliance on a policy which worked by financing overpriced housing was better than using surplus savings for higher public investment? Similarly, who can confidently state that it must be better to rely on relaunching a private credit boom than on higher public investment? Monetary policy is not self-evidently the most reliable instrument for tackling the implosion of a prior debt explosion.

No Responses to “Excessive credit leads to crash… so expand credit again?” Leave a reply ›

Leave a Reply

Archives

CONTACT ME

I'd like to hear from you. Feel free to email me with comments, suggestions, whatever. I can be reached at mail@americansituation.com.