The Zero Bound Dilemma

A battle plan, we are told, seldom survives contact with the enemy. Nonetheless, military leaders throughout the world wisely persist in making plans they know will be changed time and time again once the battle starts. Contingency plans are made for all sorts of events, whether likely or unlikely, on the off chance that when something goes wrong (and Murphy assures us it will) that there will be a plan to deal with the next crisis, even if it is to declare victory and go home. Armies train to fight in every form of terrain, in all types of severe climes, as who knows from whence the next source of conflict may arise?

What would we think of a military force that failed to plan or train? We might question the political wisdom of a particular course of military action, but we expect our various militaries to be professional - to have planned for many different scenarios in which they might be called to act.

This week we watch as again the plans of governments and companies, of individuals and families for dealing with catastrophic events are put to the test. Can you imagine the disaster and loss of life from the three hurricanes (with more apparently on the way!) that would have happened had everyone waited until the winds and waves were at the door?

Should we expect that our economic generals will not also plan…