Since the current policy mix has failed, Turner reflects, “we must think fundamentally about what went wrong and be adequately radical in the redesign of financial regulation and macro-prudential policy to ensure it doesn’t happen again.”
In this lecture, Turner does just that, getting to the root causes of the crisis and proposing policy solutions to clean up the mess and get our economies growing sustainably.
The good news is that the crisis has opened this debate and created the possibility for change. New policies and previously radical policies, like overt monetary finance and NGDP targeting, are beginning to be considered. Turner’s lecture provides an important roadmap for central banks and governments of the broad toolkit at their disposal. As economic crises persist around the world, hopefully they will listen.