In response to current economic circumstances, the federal interest rate has been cut by 50 basis points and is now at the same rate that former Fed Chairman Greenspan kept things at from June 25 2003 to June 30 2004. This year-long rate of 1.oo between 03 and 04 is commonly seen as creating the easy money/credit that led directly leading to the current crisis. Said another way, money is now available at the same low cost that people are beginning to see led to the current housing and credit crisis to begin with.
So, in sum, the thinking seems to be: easy money has got us into the problem. And easy money will get us out. This two-prong understanding of easy money as the cause-all and cure-all is now official knowledge. It drives our understanding of the cause behind the crisis, and it drives our understanding of what will cure the crisis.
My question -- is this good science? Or a lack of creative understanding of how to handle a credit-based economy? Is it ingenious? Or stupid?
No comments:
Post a Comment