The Great Recession

Wednesday, Jul 01, 2009

One of the most striking features of the economic landscape over the past twenty years or so has been a substantial decline in macroeconomic volatility.

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My view is that improvements in monetary policy, though certainly not the only factor, have probably been an important source of the Great Moderation.

Ben Bernanke, Member of the Board of Governors of the US Federal Reserve System, at the meetings of the Eastern Economic Association, Washington DC, February, 20 2004, http://www.bis.org/review/r040301f.pdf?noframes=1.

House prices have risen by nearly 25 percent over the past two years. Although speculative activity has increased in some areas, at a national level these price increases largely reflect strong economic fundamentals, including robust growth in jobs and incomes, low mortgage rates, steady rates of household formation, and factors that limit the expansion of housing supply in some areas.

The Economic Outlook, Ben S. Bernanke, Chairman, President's Council of Economic Advisers, Testimony before the Joint Economic Committee, October 20, 2005, http://georgewbush-whitehouse.archives.gov/cea/econ-outlook20051020.pdf.

> > I've abandoned free-market principles to save the free-market system, to make sure the economy doesn't collapse. > U.S. President George W. Bush, Bush says sacrificed free-market principles to save economy, Breitbart.com, December 16, 2008, [http://www.breitbart.com/article.php?id=081216215816.8g97981o&show_article=1](http://www.breitbart.com/article.php?id=081216215816.8g97981o&show_article=1). > > We’re going to go bankrupt as a nation... Now, people when I say that look at me and say, ‘What are you talking about, Joe? You’re telling me we have to go spend money to keep from going bankrupt?’ The answer is yes, that's what I’m telling you. > U.S. Vice President Joe Biden, Joe Biden: ‘We Have to Go Spend Money to Keep From Going Bankrupt’, CNSNews.com, July 16, 2009, [http://www.cnsnews.com/public/content/article.aspx?RsrcID=51162](http://www.cnsnews.com/public/content/article.aspx?RsrcID=51162).

[The Great Preventer](http://www.nytimes.com/2009/07/26/opinion/26roubini.html)

> > A new Rasmussen Reports national telephone survey finds that 75% of Americans favor auditing the Federal Reserve and making the results available to the public > Rasmussen Reports, 75% Favor Auditing The Fed, July 29, 2009, [http://www.rasmussenreports.com/public_content/business/general_business/july_2009/75_favor_auditing_the_fed](http://www.rasmussenreports.com/public_content/business/general_business/july_2009/75_favor_auditing_the_fed).