Ignorant and unrepentant

The following is a very slightly modified version of my comment left on the column by Martin Sandbu of FT on Helicopter Money:

In 2009-09, zero interest rates (or, near zero) and quantitative easing were thought of as radical solutions that would definitely revive economic growth. They helped stave off a descent into economic depression. But, the subsequent recovery has been tame and has been accompanied by huge costs (inequality), re-ignition of asset  bubbles (divergence of financial asset prices from economic fundamentals and unaffordability of homes relative to household earnings). Back then, these were deemed radical solutions that would surely work, according to text book theory. They have, by and large, disappointed and have also brought in uncertainty and anxiety among households, pensioners. It would be hard to deny a sense of malaise in the developed world. These policies have played their part in it, undoubtedly.

Yet, without any trace of reflection, introspection, honesty or humility, further extensions of such policies are being proposed and with impunity. Saner voices even among the establishment – such as William White (Chief Economist, OECD), Raghuram Rajan (Governor, Reserve Bank of India) and Mervyn King (ex-Governor, Bank of England) – are being deliberately ignored and their critique unaddressed.

The audacity of certitude steeped in ignorance and devoid of either embarrassment (at the relative failure of previously proposed solutions) or humility (about the unintended consequences) is amazing at one level and deeply worrying at another level.


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