Well, it turns out that we did it with the COVID economic shocks, and for a while there was talk of a “soft landing” but that’s all but disappeared from the conversation.
Well, it turns out that we did it with the COVID economic shocks, and for a while there was talk of a “soft landing” but that’s all but disappeared from the conversation.
> everyone had seen Japan fail to pump up its economy
Agreed about this, but I feel like everyone is watching Japan right now again. And I fear people will make wrong assumptions, given how its "economy is growing right now".
Not saying you're wrong about anything you're saying, to be clear.
Even songs we don't like have a lot of 'poetry' in their notes...
Interest rates were kept at historic lows for a decade because the 2008 crisis caused available credit to absolutely implode, which destroyed a huge swath of the effective money supply. Leverage ratios at banks went from north of 40:1 to closer to 10:1. Without ZIRP and QE and all of the rest, we would have had outright deflation, kicking off the kind of deflationary debt spiral that made the Great Depression so bad.
That kind of dramatic destruction of credit did not happen during the pandemic. The banks were fine [0]. What happened was that the economic output of actual goods and services collapsed. So high levels of stimulus led to more money chasing fewer real resources, and you got inflation instead.
This should not have been a surprise.
[0] Modulo a few like SVB that blew up a couple of years later because they had forgotten that interest rates could also go up.