As goes alternative scenarios, it is perfectly conceivable that had Bush cut taxes the right way – at the margin, immediately, and permanently, in 2001 – the Fed would have never panicked into taking rates so basely low for so long. The good tax cut would have been sufficient to ward off a recession in the context of normal interest rates, even given 9/11. There would have been no housing and commodities bubble, because rates would never have been so close to zero as to invite these things. And the quicker boom would have made unnecessary the desperate dollar-devaluation ploy that became a Bush administration hallmark.
The primary question we must ask about the 2000s is not what caused the crisis as the decade came to a close, but why was growth so subpar the whole time?
Cause and effect - the human mind was not made to understand this much complexity. But this is an interesting speculation nonetheless.
No comments:
Post a Comment