Morning Must-Read: Olivier Blanchard: Where Danger Lurks

Olivier Blanchard: Where Danger Lurks: “Until the 2008 global financial crisis…

…mainstream U.S. macroeconomics had taken an increasingly benign view of economic fluctuations in output and employment. The crisis has made it clear that this view was wrong…. The techniques we use affect our thinking in deep and not always conscious ways…. The techniques were best suited to a worldview in which economic fluctuations occurred but were regular, and essentially self-correcting. The problem is that we came to believe that this was indeed the way the world worked…