Beet
Atlas Star
Posts: 28,915
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« on: February 25, 2009, 04:46:54 PM » |
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The amount of "easing" of monetary policy required to fix the multi-trillion dollar financial collapse would have put America's position as a haven for foreign capital in serious jeopardy, both in the short term and long term. Effectively you would be printing money and using printed money to bail out the banks. Not that that is not an option today, or any time in the future- the government can always print money. But if it can, it will always go to borrowing over printing.
Unfortunately, this goose was already cooked by September 2008, or any other time in 2008. The best that could have been hoped for by summer 2008 was a Japan-style scenario, where the full extent of the problems are hidden for years and society pays over a long, extended period. Unlike most others I consider this to be one of the better alternatives, providing that the economy gradually made the adjustments it needed to make over this time, but the time where something like that was possible is now past.
As for the "Great Moderation", it should be called the Great Misnomer. Fluctuations in asset prices and innovations in finance during this period were anything but 'moderate', and that is the crux of the whole problem.
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