Keeping our economic system intact (despite all the signs that this is an unsound goal) might require increasingly aggressive interventions.
The response to the last financial crisis and the recession that resulted from it involved some unconventional and largely untested macroeconomic measures - most notably Quantitative Easing (QE) and a zero interest-rate policy (ZIRP).
"Before the financial crisis and recession, unconventional policies were still mostly theoretical concepts on the drawing board, untested on the battlefield. Once they were deployed, researchers from across the globe mobilized, quickly filling the vacuum regarding what works and what doesn’t work." ( https://www.frbsf.org/our-district/press/presidents-speeches/williams-speeches/2013/october/research-unconventional-monetary-policy-financial-crisis/ )
CNBC is reporting on a new analyst report which suggests that even more radical policies will be on the table the next time around (that is, very soon now, since the next recession is probably already beginning). An AB Bernstein report mentions a number of possibilities:
This Brookings Institution article by Ben Bernanke (first of a three-part series; see also Part 2 and Part 3) presents a very similar discussion of policy options from the mouth of the central banker himself.
The willingness to embrace ever more unconventional responses to economic downturns is not surprising, but it is quite disturbing. Mainstream economics is hopelessly misguided on this front. Nowhere in the report or the discussion of it is there any mention of the larger structural factors which threaten the viability of our entire economic and social order - an unsustainable relationship to the environment, massive inequality, wage slavery and worker alienation, the spiritual deficit at the heart of our system. Instead, the discussion is of ever more extreme technical measures which will be foisted experimentally on an economic system under dangerous stress. This sounds like a recipe for disaster.
Instead of recognizing the next recession as an opportunity to pursue a Small Is Beautiful model in which we embrace being satisfied with fewer material things and refocus on personal relationships, our communities, artistic and creative works of real value, and healing the earth, our policymakers will try to shore up the existing system by any means available. Encouraging lower levels of activity and output (which is what people and the planet actually need) is simply not a possibility within the existing order. One reason? Debt. Without ever-increasing GDP, it is simply not realistic for the US and other nations to repay their massive debts (it might not be realistic even at existing or higher levels of GDP, for that matter).
This myopia on the part of our policymakers leads me to believe that an orderly transition to a new and less destructive economic order might not be possible. Unfortunately, we might be forced to change our ways by the unavoidable breakdown of the growth-at-all-costs paradigm and the institutions which support it.