Most observers regard unconventional monetary policies such as quantitative easing
(QE) as necessary to jump-start growth in today's anemic economies. But
questions about the effectiveness and risks of QE have begun to
multiply as well. In particular, 10 potential costs associated with such
policies merit attention.
First, while a
purely "Austrian" response (that is, austerity) to bursting asset and
credit bubbles may lead to a depression, QE policies that postpone the
necessary private- and public-sector deleveraging for too long may
create an army of zombies: zombie financial institutions, zombie
households and firms, and, in the end, zombie governments. So, somewhere
between the Austrian and Keynesian extremes, QE needs to be phased out
over time. - excerpt from an article in The Guardian
