Larry Summers's Unified View of Recessions
From Ryan Lizza's profile:
In the fall of 2007, [Summers's] Financial Times columns took on a more urgent tone, starting with a piece on November 25th, titled “Wake Up to the Dangers of a Deepening Crisis.” There had been at least six major financial crises that affected the United States over the past twenty years: the 1987 stock-market crash, the 1990 savings-and-loan crisis, the Mexican-peso crisis, the East Asian economic crisis, the failure of Long Term Capital Management, and the tech-bubble crash. Summers had a theory that tied them together: whereas for many decades most recessions were caused by the Federal Reserve’s attempts to curb inflation, the Fed’s recent mastery of keeping inflation in check had given rise to the financial crisis. Summers explained that, just as the success in curing infectious disease will allow some people to live longer only to die of cancer, the success in battling inflation will prolong an economic expansion only to lead to overconfidence and a financial crisis.
October 5, 2009; 4:31 PM ET
Save & Share: Previous: Phil Schiliro
Next: How the Obama Administration Developed the Stimulus
Posted by: visionbrkr | October 5, 2009 4:39 PM | Report abuse
Posted by: visionbrkr | October 5, 2009 4:49 PM | Report abuse
Posted by: toshiaki | October 5, 2009 5:01 PM | Report abuse
Posted by: alex50 | October 5, 2009 5:38 PM | Report abuse
The comments to this entry are closed.