"That the central banks were totally surprised by today’s inflation indicates a fundamental failure. Surely, some institutional soul searching is called for...."

"The obvious question to ask first is how the Fed [and the local Reserve Bank] blew its main mandate, which is to ensure price stability. That the Fed [and the Reserve Bank] was totally surprised by today’s inflation indicates a fundamental failure. Surely, some institutional soul searching is called for....
    "America [and the world] is awash in debt. Everyone assumes that taxpayers will take on losses in the next downturn. Student loans, government pensions, and mortgages have piled up, all waiting their turn for Uncle Sam’s bailout. But each crisis requires larger and larger transfusions. Bond investors eventually will refuse to hand over more wealth for bailouts, and people will not want to hold trillions in newly printed cash. When the bailout that everyone expects fails to materialise, we will wake up in a town on fire – and the firehouse has burned down.
    "In 2008, regulators and legislators at least had the sense to recognize moral hazard, and to worry that investors gain in good times while taxpayers cover losses in bad times. But the 2020 blowout has been greeted only with self-congratulation.
    "The same Fed [and Reserve Bank] that missed the subprime-mortgage risks in 2008, the pandemic in 2020, and that now wishes to stress-test 'climate risks,' will surely miss the next war, pandemic, sovereign default, or other major disruptive event. Fed regulators aren’t even asking the latter questions. And while they issue word salads about 'interconnections,' 'strategic interactions,' 'network effects,' and 'credit cycles,' they still have not defined what 'systemic' risk even is, other than a catch-all term to grant regulators all-encompassing power.
    "Regulators will never be able to foresee risks, artfully calibrate financial institutions’ assets, or ensure that immense debts can always be paid. We need to reverse the basic premise of a financial system in which the government always guarantees mountains of debt in bad times, and we need to do it before the firehouse is put to the test."
          ~ John Cochrane, from his post 'Accounting for the Blowout'