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How Bernanke Staged a Revolution

 
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PostPosted: Sun Apr 12, 2009 2:11 pm    Post subject: How Bernanke Staged a Revolution Reply with quote

http://www.washingtonpost.com/wp-dyn/content/article/2009/04/08/AR2009040804401.html?hpid=artslot

My comment:

Bernanke has some responsibility for creating this recession. The Bernanke Fed kept a restrictive monetary stance for too long, i.e. the Fed Funds Rate at 5 1/4% from June 2006 to September 2007, and fell behind the curve easing the money supply. The Bush tax cut in early 2008 gave the Fed time to catch-up. However, I give credit to the Fed for easing the money supply, while commodity prices were reaching new highs till mid-2008.

Global imbalances were correcting slowly, until Lehman was allowed to fail in mid-September 2008, which coincided with the Ted Spread rocketing and froze the credit market quickly. Consequently, global imbalances began to correct suddenly, while the economy, and stock market, fell off a cliff. However, the U.S. navigated surprisingly well in uncharted waters till September 2008.
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