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Ms. Lagarde urged "very accommodating monetary policy," "direct support to banks" and "growth-friendly" fiscal policies.
But perhaps profits had been boosted by accommodating monetary policy, a credit boom and the associated surge in asset prices.
Despite a substantial fiscal stimulus and very accommodating monetary policy there is little sign that recovery is imminent.
There is a new risk from the United States and other high-income economies, however: the end of extremely accommodating monetary policy.
A simplified description runs as follows: facing low growth and high unemployment, and with other policymakers stuck on the sideline, a central bank like the US Federal Reserve feels that it has no choice but to adopt a highly accommodating monetary policy.
After Mr Bernanke hinted at plans to end the bank's accommodating monetary policy in June, mortgage rates jumped sharply, threatening a fragile housing recovery.
Similar(50)
These excesses could develop only because of massive credit inflation and accommodating monetary policies.
In short, Alan Greenspan's accommodating monetary policies will remain largely ineffective.
If accommodated by monetary policy, the jump in energy prices could spill over into general inflation and inflationary expectations, as was so evident in the 1970's.
Fortunately, the government has room for countercyclical policy and has already responded with more accommodating fiscal and monetary policies.
It asserts that if a country raises taxes and expenditures by the same amount in a time of high unemployment, and if monetary policy is accommodating, the national income grows by exactly the amount of the tax, so that after-tax income is unchanged.
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com