Bernanke's little depression

David Beckworth sobre la columna de Ambrose Evans-Pritchard

"To be clear, the Market Monetarist's view is not that the Fed deliberately caused the Little Depression, but rather that the Fed failed to fully respond to a number of developments over the past four years that significantly raised the demand for money: the U.S. collapse in 2008-2009, the Eurozone Crisis of 2010-present, and the debt ceiling crisis of 2011.  We don't see these events dramatically changing the productive capacity of the U.S. economy over this time, but we do see them increasing the demand for money and other safe assets because of the economic uncertainty they created. The Fed could have met this spike in demand for liquidity by better managing expectations about future nominal income. The Fed's failure to do so amounts to what we call a passive tightening."