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Last month — just a few days before the European Central Bank announced its intention to initiate quantitative easing (QE) — I attended a seminar in Geneva with journalists, policymakers and investors. The discussions there, much like those in Japan before Prime Minister Shinzo Abe launched his groundbreaking economic-reform strategy in 2012, reflected an inadequate understanding of unconventional monetary policy’s transformative potential.

Indeed, at the seminar, European economists and journalists — especially the Germans, and even some of the Britons in the room — adopted a dismissive tone. “Monetary policy’s power is limited, particularly when the interest rate is so low,” some said. “We cannot count on accommodative monetary policy to spur a portfolio reshuffling,” others added.

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