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The article points to the FDIC and the misalignment of incentives it creates when it is combined with small undiversified banks, as the primary cause of the cri
by CryptoPunk 9y ago
The article points to the FDIC and the misalignment of incentives it creates when it is combined with small undiversified banks, as the primary cause of the crisis. The note on the central bank's monetary policy relates to the Great Depression, not the 2008 crash.
- eru 9y agoYou are right. I was interpreting things a bit more liberally: the housing crisis and banking crash would have stayed relatively small, if the Great Recession wouldn't have started: At some point nGDP started to fall, giving the housing market and banks more trouble.