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Why not counter cycle the lending activity instead of exacerbating the business cycle? Oh wait we're economists - free markets are sacrosanct and they are effi
by confluence 14y ago
Why not counter cycle the lending activity instead of exacerbating the business cycle?
Oh wait we're economists - free markets are sacrosanct and they are efficient - if there is an arbitrage opportunity to short surely the rational investors will price it correctly. Not.
- tatsuke95 14y ago>"Why not counter cycle the lending activity instead of exacerbating the business cycle?" That's easier said than done. Most of it is politics. But they do. The Fed began tightening monetary policy back in 2004, when rates went from just below 2% to 5.5%. They did so to start to "cool" the economy, and it essentially popped the housing bubble.