The Federal Reserve also shared this Keynesian viewpoint. It provided unprecedented monetary stimulus, increasing the monetary base by more than $1 trillion. Much of this increase corrected for its major mistake: allowing Lehman Brothers to fail. After 30 years of bailing out almost all large financial firms, the Fed made the horrendous mistake of changing its policy in the midst of a recession. That set off a scramble for liquidity and heightened the public's distrust in the market.
Tuesday, September 1, 2009
Meltzer on the recession
Allan Meltzer argues in The Wall Street Journal that the current recession is not like the Great Depression. I thought this paragraph was interesting.