… is from page 118 of Edward Chancellor’s excellent 2022 book, The Price of Time: The Real Story of Interest (footnote deleted):
Why were the credit systems of so many different countries, from Australia to Iceland, so vulnerable at the time [of the 2007-09 recession]? The unifying factor appears to be the low-interest rate policy of the Federal Reserve at the turn of the century, which, owing to the special position of the dollar as the global reserve currency, created conditions for a credit boom that engulfed much of the world’s economy. Prior to the crisis, global interest rates were negative in real terms and far below the growth rate of the world’s economy…. There is no need to appeal to ad hoc explanations: easy money produced the boom and the boom was followed by the inevitable bust.
DBx: This account is one that Hayek would find compelling. And so it’s appropriate that this evening in New York City Edward Chancellor will receive, for his book The Price of Time, the Manhattan Institute’s 2023 Hayek Book Prize. I look forward to hearing his acceptance lecture.