Economists can only recommend.

Humans are irrational but markets were supposed to be rational, wrote Prof N Smith. But that is no longer believed to be true. A study in 1989 found that "so-called noise traders -- a coordinated herd of investors who either overpay or underpay for a financial asset -- can act in concert to push prices out of line with fundamentals. With their limited resources, rational arbitrageurs can't always risk pushing back against the irrational trade -- sometimes like a movie character who throws down his shotgun and runs when faced with an onrushing gang of zombies, rational traders can end up moving in the same direction as the speculators." Exchange traded funds, or ETFs, are supposed to carry out arbitrage to bring prices in line with fundamentals but even they go with the market. Two IMF economists, V Cerra and SC Saxena, have written a papers suggesting that output growth never returns to previous levels after a recession, wrote VA Nageswaran. They recommend that central banks should not try to prevent a recession by easy monetary policy because output loss is permanent. "In reality, by giving rise to the confidence and hope that central bankers can avoid a recession, they encourage excessive risk-taking that eventually produces a recession, or worse, an economic crisis." In fact, that is precisely what central banks have been doing. Ever since the subprime crisis of 2008 central banks have resorted to zero interest rate policy. or ZIRP, some central banks, including the European Central Bank, have negative interest rates, and almost all central banks of developed economies have been buying bonds in, what is known as, quantitative easing. Economists can make recommendations by studying previous behavior and central banks can set monetary policy, but trade, financial and tax policies are decided by politicians who have to please their support base. Sadly, rich countries have not followed the Havana Charter of 1948, signed by 56 countries, "It insisted that countries should be protected against external shocks and predatory corporate behaviour, that their international commitments should be commensurate with their level of economic and social development and that the full use and equitable distribution of the world's human and material resources would be managed through strong public action, at both the national and international levels," wrote R Kozul-Wright. Economies which are open can be studied but no one has any idea about China, which is the second biggest economy in the world. The road ahead could be very rocky.