Paul Krugman
We believed the problem of economic depressions was solved, but the 2008 crisis proved that the financial monsters of the 1930s have returned to haunt the modern world.
The 2008 financial meltdown was largely driven by a run on the unregulated shadow banking system rather than traditional commercial banks.
Standard monetary policy becomes ineffective when interest rates hit zero because the economy enters a liquidity trap where cash hoarding prevails.
Policymakers must reject the efficient market hypothesis and accept that financial markets are prone to irrational bubbles and panic.