Seems that boom-bust cycles cannot be avoided.

Since the sub-prime crisis of 2008 central banks have kept interest rates at 0% in the US, Europe and Japan poured trillions of dollars into banks through purchase of bonds, to help avoid Lehman Brothers type of collapse of banks, and hope that this flood of liquidity would increase lending to businesses to increase global economic growth and lead to falling unemployment. But apparently all this extra money has had the opposite effect on markets, which have become increasingly illiquid. There have been a few instances of such lack of liquidity in markets. There was the flash crash in May 2010 when US stocks crashed by nearly 10% in 30 minutes, in 2013 long term interest rates jumped by 100 basis points when the then Federal Reserve Chair, Ben Bernanke talked about tapering the quantitative easing program and in October 2014 US Treasury yields fell by 40 basis points, which apparently can only happen once in 3 billion years. Also, recently yields on German Bunds have risen from 5 to 80 basis points within 10 days. With interest rates at 0% funds have been investing in illiquid instruments in search of higher yields which means that prices fluctuate wildly when everyone seeks to enter or leave at the same time. In India negative real interest rates along with huge black money creation during the 10 years of Congress saw an astronomical rise in real estate prices, shown by the difference between lending rates and yields from rent. Now real interest rate is positive, big scams have disappeared and states have increased circle rates to market levels so that people are being forced to pay the entire cost in white money. The market is almost static. After the recent earthquake in Nepal there is a fear about buying flats in high rise buildings. Prices are so high that no normal Indian can afford to buy property so a fall will be welcome. Wild gyrations in markets and assets is not good for investors or the government who have to make decisions regarding the future. One would expect that economists would be able to prevent crises by seeing problems as the arise and advising corrective actions but they have failed to predict the East Asian crisis, the dot com crisis and, more recently, the sub-prime crisis. Now economists are going for evidence based models. Some are using new data, but how do you weigh the importance of what you see. For instance, do you believe that a Grexit will have minimum effect on the Euro, as the Germans believe, or will it set off a slow dismantling of the Eurozone? Some are studying history to prevent future crises but Ben Bernanke, being an expert on the Great Depression, could not prevent the present mess. Seems that we will continue to go through boom-bust cycles.