Create an Account
username: password:
 
  MemeStreams Logo

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

search

possibly noteworthy
Picture of possibly noteworthy
My Blog
My Profile
My Audience
My Sources
Send Me a Message

sponsored links

possibly noteworthy's topics
Arts
Business
Games
Health and Wellness
Home and Garden
Miscellaneous
  Humor
Current Events
  War on Terrorism
Recreation
Local Information
  Food
Science
Society
  International Relations
  Politics and Law
   Intellectual Property
  Military
Sports
Technology
  Military Technology
  High Tech Developments

support us

Get MemeStreams Stuff!


 
Three cures for three crises | Brad DeLong, in the Taipei Times
Topic: Politics and Law 11:03 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.

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



 
 
Powered By Industrial Memetics
RSS2.0