Create an Account
username: password:
 
  MemeStreams Logo

Three cures for three crises | Brad DeLong, in the Taipei Times

search

Decius
Picture of Decius
Decius's Pics
My Blog
My Profile
My Audience
My Sources
Send Me a Message

sponsored links

Decius's topics
Arts
  Literature
   Sci-Fi/Fantasy Literature
  Movies
   Sci-Fi/Fantasy Films
  Music
   Electronic Music
Business
  Finance & Accounting
  Tech Industry
  Telecom Industry
  Management
  Markets & Investing
Games
Health and Wellness
Home and Garden
  Parenting
Miscellaneous
  Humor
  MemeStreams
Current Events
  War on Terrorism
Recreation
  Cars and Trucks
  Travel
Local Information
  United States
   SF Bay Area
    SF Bay Area News
Science
  Biology
  History
  Math
  Nano Tech
  Physics
Society
  Economics
  Politics and Law
   Civil Liberties
    Internet Civil Liberties
    Surveillance
   Intellectual Property
  Media
   Blogging
Sports
Technology
  Computer Security
  Macintosh
  Spam
  High Tech Developments

support us

Get MemeStreams Stuff!


 
Three cures for three crises | Brad DeLong, in the Taipei Times
Topic: Politics and Law 11:29 pm EST, Jan  3, 2008

Since late summer, the US Federal Reserve has been attempting to manage the slow-moving financial crisis triggered by the collapse of the US housing bubble.

At the start, the Fed assumed that it was facing a first-mode crisis -- a mere liquidity crisis -- and that the principal cure would be to ensure the liquidity of fundamentally solvent institutions.

But the Fed has shifted over the past two months toward policies aimed at a second-mode crisis -- more significant monetary loosening, despite the risks of higher inflation, extra moral hazard and unjust redistribution.

As Fed Vice Chair Don Kohn recently put it: "We should not hold the economy hostage to teach a small segment of the population a lesson."

No policymakers are yet considering the possibility that the financial crisis might turn out to be in the third mode.

This is a scariest thing I've read in the past few months.

Three cures for three crises | Brad DeLong, in the Taipei Times



 
 
Powered By Industrial Memetics
RSS2.0