Monday, February 09, 2009

John Taylor: How Government Created the Financial Crisis

Monetary policy expert John Taylor has an excellent opinion piece in The Wall Street Journal entitled "How Government Created the Financial Crisis- Research shows the failure to rescue Lehman did not trigger the fall panic" that succinctly argues that it was a string of monetary policy errors and misguided interventions on the part of the Federal Reserve and Treasury that created and prolonged the financial crisis. Technically, he is absolutely correct, but unfortunately monetary policy has more than a little domestic politics guiding it that precludes a strict and correct monetary policy. Could we have done better? Yes, but we could have done a lot worse as well.

-- Jack Krupansky

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