Recent research suggests that sustained accommodative monetary policy has the potential to increase financial instability. However, under some circumstances tighter monetary policy may increase financial fragility...
Can't win. Easy money increases instability. Tight money increases fragility.
Why? Because finance is big. Big, heavy, and quick to panic. You didn't see topics like Pascal Paul's back in the day finance was small. These days, every little flicker in the policy rate threatens our future.
The solution lies not in interest rate policy, but in reducing the size of finance.
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