We are in the midst of a severe economic crisis, the second in about a decade, and the third for Latin America and Asia. It appears that information based economies are volatile. This is partly due to the fundamental price deflation in some of the core information services and products, and partly due to the much greater speed of transactions that outpace the ability of traditional institutions to cope. Information technology contributes to the volatility. But can the same technology also provide new tools for stabilisation?

Cyclical swings in the economy are as old as mankind. The Bible tells us about seven fat years in Egypt followed by seven lean years. Each economic system has its economic policy instruments to deal with swings. In ancient Egypt, Joseph’s warnings led to the creation of granaries. In feudal ages, the tools were control over the composition of coins, and severe restrictions on land and its workforce. These policies, in turn, became outdated for the industrial age, which pursued aggregate demand enhancement by governmental spending and taxation, control of the money supply, and manipulations of interest rates.