Can Central Bankers Prevent A Great Depression?



Greenspan’s second error was pegging interest rates too-low and too-long at 1%, and moving too slowly to lift the fed funds rate to a more neutral level, that could have taken the wind out of the housing bubble. Instead, Greenspan was a “serial bubble blower,” inflating commodity and housing prices at the same time, while casting a blind-eye to reckless sub-prime lending in the mortgage market.


After stock market “bubbles” collapse, coinciding with economic recessions, it can take several years until the forces of inflation gain the upper-hand over deflation. The textbook way to combat deflation is for central banks to rapidly expand the money supply or bank credit, and slash interest rates. That’s what the BoJ and Fed did in 2001, in a double barreled assault against deflation.


2 thoughts on “Can Central Bankers Prevent A Great Depression?”

  1. Hi there! This is my first visit to your blog! We are a collection of volunteers and starting a new project in a community in the same niche. Your blog provided us valuable information to work on. You have done a wonderful job!

  2. Goode !File Encryption is the best encryption software to encrypt, lock and hide files, folders, drives in a handy method. This encryption software is compatible with all popular versions of Windows operating system.

Leave a Reply

Your email address will not be published. Required fields are marked *