This New York Times review of the Federal Reserve’s 2009 transcripts provides ample evidence that, as was the case for the Great Depression some 80 years prior, the wrong lessons are being learned from the financial crisis and the Great Recession it spawned.
When Ben S. Bernanke walked into the Federal Reserve’s ornate boardroom in December 2009, the officials who were gathered around the long table gave the Fed’s chairman a standing ovation.
Mr. Bernanke had just been crowned Person of the Year by Time magazine. The recession had ended, unemployment had crested and Mr. Bernanke was widely regarded as singularly responsible.
But the return to normalcy that Mr. Bernanke and his committee began to chart at that end-of-the-year meeting soon proved premature. The Fed had arrested the financial crisis, but the moment would also turn out to be the beginning of a yearslong series of failures to provide a sufficiently large dose of stimulus to restore the battered American economy to its previous health.
Then again, maybe it’s just me…
I’ve always assumed that an economy and financial system that lurched from one central bank enabled asset bubble to another wasn’t “normal” when, in fact, maybe it is.
It appears that the lesson being learned over the last six years is that, unlike the internet stock bubble-to-housing bubble transition, the Fed just didn’t do enough to facilitate the housing bubble-to-whatever we end up calling the next bubble transition.