Economic policies are no longer countercyclical; they are systematically expansionary

In the past, OECD countries’ monetary and fiscal policies alternated between expansionary and restrictive; they were countercyclical. Today, they have become chronically expansionary, as governments and central banks in OECD countries no longer dare use restrictive policies. The upshot of this shift from countercyclical economic policies to economic policies with a permanent expansionary bias is twofold: The OECD’s public debt ratio will tend to rise continuously; The OECD’s monetary base (the stock of central bank money) will tend to rise continuously. The fact that these two trends coincide with one another prevents interest rates from rising but increases the risk of various kinds of crisis in the future .