Monetary policy

Under this tab, we intend to show that monetary policy was contractionary during the Bernanke era before the crisis. We suspect that it precipitated the recession, the decline in housing prices, and the mortgage crisis. We will concede that longer standing problems contributed. We will also concede that the Fed’s initial response to the crisis was unprecedented and probably kept us out of depression.

The peculiarity here is that some have criticized the Bernanke Fed as being too expansionary prior to the crisis. Their evidence is the low interest rates. See our interest rate tab for an explanation of why that view may be incorrect.