« Links for 04-21-15 | Main | 'Rethinking Macroeconomic Policy' »

Tuesday, April 21, 2015

'An Overwhelming Argument for Draconian Bank Regulation'

Paul Krugman on John Taylor's claim that deviations from his Taylor Rule caused the financial crisis:

...if it’s really that easy for monetary errors to endanger financial stability — if a deviation from perfection so small that it leaves no mark on the inflation rate is nonetheless enough to produce the second-worst financial crisis in history — this is an overwhelming argument for draconian bank regulation. Modest monetary mistakes will happen, so if you believe that these mistakes caused the global financial crisis you must surely believe that we need to do whatever it takes to make the system less fragile. Strange to say, however, I don’t seem to be hearing that from Taylor or anyone else in that camp.

    Posted by on Tuesday, April 21, 2015 at 06:12 AM in Economics, Financial System, Monetary Policy, Regulation | Permalink  Comments (25)


    Comments

    Feed You can follow this conversation by subscribing to the comment feed for this post.