The world has started to lurch back towards financial crisis, for the first time since the months immediately after Lehman Brothers collapsed. So says the International Monetary Fund, and in doing so it merely expresses what many, judging by asset prices, already fear. The IMF not only quantifies and justifies those fears, it suggests that the favoured solution – easier monetary policy – is part of the problem.

The IMF’s latest global financial stability report says rightly enough that the eurozone crisis, and the row over the US debt ceiling, sparked an increase in risk aversion. But the IMF worries that exceptionally low interest rates are building a fresh credit problem. They have spurred a hunt for yield which, as widely broadcast, has sent too much capital to emerging markets. When capital is too cheap, it is mis-allocated.

Less widely broadcast is the IMF’s convincing assertion that the search for yield has driven bad credit decisions, primarily in the US. Since 1930, no cycle has seen corporate credit spreads narrow so much so quickly, suggesting a rush to anything that pays a yield. Over history, current spreads coexisted with US real interest rates of 1 per cent (they are now about minus 3 per cent). The IMF also notes that investors are abandoning disciplined investment styles in seeking yield, and that credit is ever more intermediated through non-bank channels. The results: big companies get capital too easily, while bank-reliant smaller companies get none.