The history of the financial crisis tells a disturbing tale for those who hold dear prosperity and democracy.
Although this should have been the moment for representative governments to rise to the occasion, too often political leaders failed to take the actions needed to preserve the welfare of those who elected them. The institutions that did the most to help economies recover were the most technocratic and without a direct popular mandate: the central banks.
The feeble response by democratically elected government, and the resulting ascent of the central banks, has produced two results. Mainstream politicians have squandered their moral authority, giving rise to populist forces both in Europe and in the U.S.
Meanwhile, the world's leading monetary authorities have faced accusations of overreach, which will not go away so long as central bankers keep the powers and the instruments they have obtained. As Paul Tucker, a former deputy governor at the Bank of England, has written in a new book, “Unelected Power,” “Central bankers have become ‘overmighty citzens' of whom too much is expected.”
