But if the needed policy response continues to lag, this period of unusual market calm would end up as another data point in support of the “instability hypothesis” of the U.S. economist Hyman Minsky – that is, the simple yet powerful idea that excessive stability breeds unsettling instability down the road.
Mohamed A. El-Erian is a Bloomberg View columnist. He is the chief economic adviser at Allianz SE and chairman of the President’s Global Development Council, and he was chief executive and co-chief investment officer of Pimco.
This column was provided by Bloomberg News.