COLUMNISTS There are, by now, a thousand and one ideas in circulation on how to change the regulatory architecture of finance. But what about changing the central bankers – or at the very least their mindset, since their notions about how to deal with bubbles have proved extraordinarily costly for the rest of us.
Interactive audio graphic explains how quantitative easing works and how this policy could stimulate the economy
Fifty years ago, central bankerly wisdom was encapsulated in the splendid phrase of William McChesney Martin, longest-serving chairman of the Federal Reserve, to the effect that the job of the Fed was to take away the punchbowl just as the party gets going. That is the polar opposite of the view of Alan Greenspan, who presided over the Fed during the bubble period. He believed that bubbles were difficult to identify and that the central bankers’ task was to clear up the mess after the bursting of the bubble rather than to make a pre-emptive strike to rectify it.
