Ann Petitfor has a not-so-long essay in ‘Prospect’ magazine on how the world could exit QE. It is an interesting and thought-provoking essay. Some extracts:
As Claudio Borio of the Bank for International Settlements explained in 2019: “bar a few who have sailed into these waters, money has been allowed to sink by the macroeconomics profession. And with little or no regrets.”
This one is elegantly put:
… What’s forgotten is that if the world’s economic activity actually had to be calibrated to fit an arbitrarily fixed volume of circulating cryptocurrency, then—exactly as under the gold standard—the world would experience prolonged and painful depressions.
This is a good way of arguing that economic activity dictates the demand for money and that the supply of money should not dictate the level of economic activity. But, we have now swung to the other extreme: We don’t care what the economic activity is…
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