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Prices would be very low and unemployment would have averaged 50% for the last 12 years. I’m half joking, but if the Fed did nothing then we would still be in
by lkrubner 6y ago
Prices would be very low and unemployment would have averaged 50% for the last 12 years.
I’m half joking, but if the Fed did nothing then we would still be in the middle of the Great Recession. Or consider the British “Great Depression” of the late 1800s — that lasted 20 years because the pound was over-valued.
- brmgb 6y agoThe interesting question is what would have happened if the USA had directely nationalized and restructured the failing banks rather than loan them money after the subprime mortgage crisis and if it had supported the economy through productive investments in infrastructure rather than lowering the Federal funds rate.
- rustyboy 6y agoCompletely agree, and bought out all underwater mortages?! See HAMP program failure
- rayiner 6y agoHow does nationalizing the banks help?
- brmgb 6y agoBy allowing you to restructure them before privatizing. The crisis was a failure of gouvernance. Most of these banks were going to and should have failed. Once it was agreed that they were too big to let the situation run its course, it would have made sense to step in and actually solve the systemic problem.
- deleted 6y ago[deleted]
- smooth_remmy 6y agoBoth Democrats and Republicans acknowledge that the Great Recession was caused by government housing policy. So presumably - if we had a small government with no Fed - we would also have no Fannie Mae and the Great Recession would have never happened.
- david927 6y agoThat's going to happen anyway but now the Fed will have no power over ameliorating any of it.