Narratives of the Great Financial Crisis (GFC): Why I am out of step

Economics is not a hard science, subject to controlled experiments. In their absence, we economists construct narratives to explain events, often involving key sound bites. Among the sound bites of the financial crisis are the following: “Separate the casino from the utility bank”; “Protect the taxpayer; bail-in the bank creditor”; “Moral hazard is ever present”; “Liquidate zombie banks and zombie borrowers”. This paper argues that each of these sound bites give a misleading picture of a far more complex reality.