Niall Ferguson and Andreas Schaab (Harvard) and Moritz Schularick (The Bonn Institute of Macroeconomics and Econometrics) have an interesting new study out detailing the history of central bank balance sheet expansions and contractions in “12 advanced economies since 1900.”

 

Mainstream economists tend to belittle the significance of this subject. Monetarists and Keynesians regard an elastic money supply, manipulated by central banks, as a desirable weapon to be used in smoothing out the business cycle. Some economists even go so far as to argue that with interest rates at record lows and inflation tepid, central banks should be directly monetising government infrastructure projects.

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