It's encouraging to read a speech from a policy maker which so elegantly depicts the problems with the current Western approach to monetary policy

It's encouraging to read a speech from a policy maker which so elegantly depicts the problems with the current Western approach to monetary policy. As Jaime Caruana, General Manager BIS (former Governor Bank of Spain), lays out in his recent speech, there are broadly speaking 2 understandings of the Western economic situation that inform approaches to Western monetary policy: i) the 'Shortfall of Demand' view; & ii) the 'Balance sheet recession' view (see (VIEW LINK) for recent speech). Our sympathy lies with the second view (with various accompanying minor nuances). In particular we laid out an update on those views, most recently, in our Longview Letter from late April 2014 titled: Pass the Debt Parcel; a.k.a How Western Monetary Policy Increases Global Financial Instability. In the note we describe the process of contiguous credit booms and busts across the global economy - see (VIEW LINK) for full detail