Inflation in the US and the world is declining, but major economies continue to struggle with imbalances and moral hazard.

• Emerging markets are successfully fighting inflation, but the global economy has not yet broken the impasse.

• Ignoring the historical context of economic development leads to political mistakes.

• The historical context of economic development is the key to political mistakes.

• Post-GFC financial reforms encourage regulatory arbitrage and increase the share of financial assets held by lightly regulated nonbank financial institutions.

• Central banks missed the opportunity to embark on serious quantitative tightening after the GFC.

• Growing government involvement in the economy raises expectations for additional public support and financial assistance.

• Measures to resolve the crisis could lead to increased concentration in the financial sector and elsewhere.