The once-again fashionable Austrian School of Economics, led by Ludwig von Mises and F. A. Hayek, explored the reason decades ago: grotesquely distorted rates of interest lead to poor investment choices. The Fed's decision to lower rates to 1 per cent in the early noughties in response to an illusory deflation threat, for example, stoked booms in financial services, property prices and construction. Banks were encouraged into higher-risk, higher-return assets such as repackaged sub-prime mortgages.

Sam Fleming 'Cheap Money now is just storing up trouble' The Times