Back in 2005, U of Chicago’s Raghuram Rajan gave a paper titled “Has Financial Development Made the World Riskier?,” which presciently warned that bankers were “flirt[ing] continuously with the limits of illiquidity” and that “we should be prepared for the low probability but highly costly downturn.” This year’s hit paper was published ahead of Jackson Hole: William White’s “Ultra Easy Monetary Policy and the Law of Unintended Consequences.”
Get this: “Ultra easy monetary policies have a wide variety of undesirable ... unintended consequences. They create malinvestments in the real economy, threaten the health of financial institutions and the functioning of financial markets, constrain the ‘independent’ pursuit of price stability by central banks, encourage governments to refrain from confronting sovereign-debt problems in a timely way, and redistribute income and wealth in a highly regressive fashion.”
White's paper is here. " William R. White is currently the chairman of the Economic Development and Review Committee at the OECD in Paris. He was previously Economic Advisor and Head of the Monetary and Economic Department at the Bank for International Settlements in Basel, Switzerland.