The balance sheet totals of three major central banks – the European Central Bank, the Federal Reserve and Bank of England – have multiplied several times since the start of the crisis. Why? What problem do they all have in common? It is easy to say they have all been fighting recurrent recessionary pressures, but this would be an incomplete answer. Recessions have occurred periodically during the past 50 years without central banks using their own balance sheets in this way.

The reason is that