Manuel Hinds and Benn Steil, writing in the Financial Times, wisely warn us that ”excessive monetary creation can destabilise the economy while the rate of CPI inflation remains low.” That is, cheap credit can feed an a boom-bust cycle in asset prices even if an index of consumer prices doesn’t move much. What Hinds and Steil see happening in the present, F. A. Hayek earlier saw as the story of the 1920s.

HT: Gaurav Tiwari