And here’s December 2001: “The good news about the U.S. economy is that it fell into recession, but it didn’t fall off a cliff. Most of the credit probably goes to the dogged optimism of American consumers, but the Fed’s dramatic interest rate cuts helped keep housing strong even as business investment plunged.”
That, of course, was the problem: by keeping housing “strong” instead of allowing the economy to correct itself, the Fed encouraged people to continue along an unsustainable path, thereby making the eventual and inevitable bust all the more severe when it finally arrived. Oops!
Filed under: Articles of Interest, Banking Concerns, Federal Reserve, Think for yourself | Tagged: Krugman, misinformation | Leave a Comment »
