South By North Strategies, Ltd.

Free Exchange advises the captains of state to steer away from the economic icebergs.

Mr [Adam] Posen [of the Bank of England] has the calculation exactly right, against the threat of simply inflationary pressures, there is no question what should be done. In America, Britain, Europe, and Japan, there are living people manning the helms of large and slow-moving but nonetheless pilot-able economies. As these captains almost universally acknowledge, they have tools at their disposal to steer economies away from deflation and high unemployment—the rudder is not broken. And yet they seem to assume either that their double-hulled marvel of a modern global economy is unsinkable in a way that the world of the 1930s was not, or that steering the ship sharply away from trouble may spill drinks on board, leading to some unpleasant clean-up afterwards.
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There is no choice here. We can see trouble ahead, and though we may not be able to appreciate the full extent of it, we know it’s likely to be messy and dangerous. If the world fails to avoid it, the resulting disaster can only be ascribed to a steering error. From either panic or carelessness, those minding the ship will have turned it one way when they should have turned it another. And future scribes will be left to wonder how they could have been so foolish.