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Quite a few macroeconomists have said the Fed caused or depeened the recession: http://bruegel.org/2016/02/blaming-the-fed-for-the-great-recession/ http://brueg

Quite a few macroeconomists have said the Fed caused or depeened the recession: http://bruegel.org/2016/02/blaming-the-fed-for-the-great-recession/ http://bruegel.org/2016/02/blaming-the-fed-for-the-great-rec... But it's also a bit philosophical, because any causal claim implicitly invokes a counterfactual. Like, if a bus drives off a cliff, was it the fault of the cliff or the bus driver who didn't respond quickly enough in trying to steer away? To me, common sense says that sometimes it's the cliff's fault and sometimes it's the driver's fault - the difference depends on how early the driver 'should' have known.

nramos3 8y ago
FAS157 was the trigger for the recession. Look it up. Hindight is 2020 looking back. It's pretty evident. But yes interest rates higher and the risky investments almost certainly blew things up even more. FAS157 was the spotlight
- thoughtstheseus 8y ago
  We can debate if FAS 157 was “the” trigger but it certainly was not the cause.
JamesBarney 8y ago
Yeah if by caused you mean could have acted more aggressively and quickly which would have reduced the depth and breadth of the recession than I've heard and agree with that. It's just a weird use of the word caused that gives people the wrong impression a lot of the time. If I say "Fireman Rick caused that house to burn down" most people will think Fireman Rick is an arsonist and not necessarily that he didn't act swiftly and quickly to put it out. And then if you say most houses burning down were caused by firemen many people might get the wrong impression that if we got rid of the fire department less houses would burn down instead of more. P.s. I know Milton Friedman is to blame for this terribly tortured use of the word.
- tedsanders 8y ago
  Yeah, I totally agree. But on the other hand, if Fireman Rick's job is to put out the occasional small wildfire, and one day a small controllable fire starts but Fireman Rick says not "not my problem, I'm gonna stay home and play video games" and then that fire burns down half the state, there's a sense in which the fireman is to blame by choosing to abandon his job. Or to give it more of a HN spin: if Rick's job was to run a website, but hackers broke in and stole all the plaintext passwords, it could be construed as partially Rick's fault for negligently storing the passwords in plaintext, even though the hackers were the ones directly responsible for the hack.
  - JamesBarney 8y ago
    Yeah the Fed is screwing up massively when it comes to crises. They're keeping inflation too low(so they spend too much time trapped at the zero lower bound), and they're not as willing to engage in unconventional policy when the risks are clearly asymetric(a great recession is way more damaging than accidentally creating a little too much inflation temporarily)

nramos3 8y ago

FAS157 was the trigger for the recession. Look it up. Hindight is 2020 looking back. It's pretty evident. But yes interest rates higher and the risky investments almost certainly blew things up even more. FAS157 was the spotlight

thoughtstheseus 8y ago
We can debate if FAS 157 was “the” trigger but it certainly was not the cause.

JamesBarney 8y ago

Yeah if by caused you mean could have acted more aggressively and quickly which would have reduced the depth and breadth of the recession than I've heard and agree with that. It's just a weird use of the word caused that gives people the wrong impression a lot of the time. If I say "Fireman Rick caused that house to burn down" most people will think Fireman Rick is an arsonist and not necessarily that he didn't act swiftly and quickly to put it out. And then if you say most houses burning down were caused by firemen many people might get the wrong impression that if we got rid of the fire department less houses would burn down instead of more. P.s. I know Milton Friedman is to blame for this terribly tortured use of the word.

tedsanders 8y ago
Yeah, I totally agree. But on the other hand, if Fireman Rick's job is to put out the occasional small wildfire, and one day a small controllable fire starts but Fireman Rick says not "not my problem, I'm gonna stay home and play video games" and then that fire burns down half the state, there's a sense in which the fireman is to blame by choosing to abandon his job. Or to give it more of a HN spin: if Rick's job was to run a website, but hackers broke in and stole all the plaintext passwords, it could be construed as partially Rick's fault for negligently storing the passwords in plaintext, even though the hackers were the ones directly responsible for the hack.
- JamesBarney 8y ago
  Yeah the Fed is screwing up massively when it comes to crises. They're keeping inflation too low(so they spend too much time trapped at the zero lower bound), and they're not as willing to engage in unconventional policy when the risks are clearly asymetric(a great recession is way more damaging than accidentally creating a little too much inflation temporarily)