Here is a statement on the supposed need to “mitigate the natural ups and downs of economic cycles” through central bank intervention using “new tools”. The alternative would result in the economy and of course the markets becoming too volatile.
Eric Petroff (Investopedia):
– Left to their own devices, free market economies tend to be volatile as a result of individual fear and greed, which emerges during periods of instability.
History is rife with examples of financial booms and busts but, through trial and error, economic systems have evolved along the way. But looking at the early part of the 21st century, governments not only regulate economies, but also use various tools to mitigate the natural ups and downs of economic cycles.
The Bank of Japan has been applying some of those “various tools”, and aggressively adding more tools lately (see post). Here is the result. So much for mitigating “the natural ups and downs”.
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