Paul Murphy (Dublin South West, Solidarity) | Oireachtas source

How would Professor Lane respond to the argument that given the nature of the growth we have had, and given that an important factor in fuelling it has been very cheap money, if we were to enter a recession the capacity for central banks, in particular, to intervene in response is very sharply limited, in quite a different way to 2007 and 2008? Martin Wolf wrote in The Financial Timesthat a powerful implication is that room for a response to a recession would be limited by historical standards, particularly in monetary policy. This is quite striking. If the US Federal Reserve had to make a standard response to a significant recession its short-term rates might need to be -2.5%. The European Central Bank and the Bank of Japan would have to go further still. By virtue of the response of the institutions of world capitalism to the most recent recession, another global recession coming would be in the context of having exhausted some of the toolkit for responding to recession, particularly monetarily. It is also the case politically but that has less to do with Professor Lane.