|[The perverse effects of easy money: The curious case of William White||The Economist](http://www.economist.com/blogs/freeexchange/2012/09/perverse-effects-easy-money?fsrc=scn/fb/wl/bl/WilliamWhite).|
Before you take their word to the bank, always seek the alternative, oft ignored voices.
This is interesting:
Mr White’s central thesis is that central banks affect the financial system much more directly than they affect the real economy or even nominal variables such as the rate of PCE inflation or the level of NGDP. As a result, there are times when stepping on the monetary gas pedal does not produce the desired results. During a balance sheet recession, the collapse in interest income hurts savers more than the decline in rates helps prospective borrowers. The collapse of the yield curve threatens the viability of intermediaries and can actually constrain credit creation. The expansion of central bank balance sheets threatens the functioning of the shadow banking system by depriving it of safe collateral. Instead of helping solve the immediate problem, it is possible that central bankers have actually been making it worse. And, of course, there is the possibility that today’s monetary policy is planting the seeds for another bubble.