WP 2015-02. Executive Summary
Western central banks have been pursuing unconventional monetary since at least 2008. Is there a way of ending them?
The authors identify the winners and losers of these policies, compared a world without them. How much are the relevant parties better/worse off?
The policies harm recovery by subsidizing a distorted structure of production and encouraging overindebtedness, new bubbles and unintended consequences that destabilize the financial system. They also discourage entrepreneurship,hard work and prudent investment. They complicate long-term planning, politicize society and erode the foundations of capitalism.
What is, if any, is the way out? And how costly is it going to be - and for whom?
The authors analyze the exit options that remain for policy makers, including
• financial repression,
• high inflation,
• capital levies,
• currency reforms, etc.
These exit options are evaluated in turn.
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