Wednesday, December 31, 2008

Greenspan to Blame

With no one denying the obvious fact that America is in a deep slump anymore, the discussion has instead shifted to why it happened. The Austrians (including me) who predicted these problems based on Greenspan’s low interest rate policy know of course that the main cause was that low interest rate policy, with his numerous bailouts of failed financial institutions also creating a moral hazard that encouraged risky behavior...

In conclusion, there can be no doubt that Greenspan, primarily through his low interest rate policy but also through the negative effects of his various bailouts, was responsible for the housing bubble and therefore the current slump.

read the entire essay

My thoughts: Greenspan has been discredited.

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