It doesn't take a genius to know which one they chose
Nearly a decade after the first poo started hitting the fan that led to the GFC and banking crisis, the talk is all about whether central banks did the right thing.
OECD's Gurria spoke about them running out of options and many people have said they've led us to a worse place with use of monetary policy.
I don't feel that they should be slammed for their actions as it all comes down to choices.
There were two ways out, as the post title says. The right way would have been to let governments take centre stage to fix the problems, while the central banks played a supporting role in trying to maintain some sort of control over policy and markets. The pain would have been harsher and lasted longer but countries would have emerged in much better shape.
The quick way was for central banks to take up the reins. At the time it was the best options as they had the tools and the ability to step in quickly. Governments didn't and here we are a long way down this path and still waiting for them to pull their heads out of their arses.
One of our readers on twitter responded to the OECD story today;
"Most of what central banks have done since 2008 should not have been done"
It's a fair point but the actions central banks took to halt the crisis is for another argument. The fact that they stepped up and acted at all should be applauded.
We all know that quick fixes are temporary and just push the problem further down the road. That means they need to be fixed properly next time. With greater calls for governments to step up to the plate, that time may be approaching faster than we think. Central banks have played their hands and all the cards are now turned up on the table and there's no more bluffing.
