What is interesting about this discussion is that it highlights Dean's disagreement with "conventional wisdom" which saw that Great Recession as a "follow on" to the financial meltdown which required the intervention of TARP and the Fed turning on the spigot (very specifically actually buying Commercial Paper directly as well as more generalized QE). If I read Dean right (and he's here to correct me of course) his point is that it was the HOUSING BUBBLE specifically that turned the financial meltdown into an (almost) depression ----
(In the period after the Stock Market crash of 1929, it was the wave of Bank failures in 1930 which the Fed failed to prevent that turned the "normal" financial crisis --- remember there had been a pretty significant one in 1921 from which the economy [not the farm sector] bounced back! --- into the Great Depression.) The overhang from the housing bubble coupled with the Obama Administration's faillure to "go big" with the Recovery Act but merely (following Geithner et al) hit the "reset button" on the financial system that led to the ridiculously sluggish recovery and --- (IMHO) --- Trump's completely unpredictable election. With no "real" analogy today to the Housing Bubble of 2002-2007 I lean towards Dean's view --- (if I have it right) --- But it sure would be great to see Bitcoin investors take a bath! [by the way --- Dean and Patrick are Swarthmore alums --- who survived a very non-radical econ department --- Dean of course was a Philosophy major which might have increased his immunity to neo-classical garbage!] On Sat, Jul 3, 2021 at 8:15 AM Patrick Bond <[email protected]> wrote: > Dean's reply: > On 7/3/2021 1:47 PM, Dean Baker wrote: > > Asset valuations are definitely very high, but they are not driving the > economy, as they did in the 1990s and 00s. If markets were to plunge 20-30 > percent, with some assets obviously falling much more, I don't see major > economic consequences. Bitcoin investors would obviously be burned, but the > economy could keep going just fine, with some patchwork to the financial > system to limit the damage from failed lenders. (Yes, Patrick and I go way > back) > > -=-=-=-=-=-=-=-=-=-=-=- Groups.io Links: You receive all messages sent to this group. View/Reply Online (#9636): https://groups.io/g/marxmail/message/9636 Mute This Topic: https://groups.io/mt/83939036/21656 -=-=- POSTING RULES & NOTES #1 YOU MUST clip all extraneous text when replying to a message. #2 This mail-list, like most, is publicly & permanently archived. #3 Subscribe and post under an alias if #2 is a concern. #4 Do not exceed five posts a day. -=-=- Group Owner: [email protected] Unsubscribe: https://groups.io/g/marxmail/leave/8674936/21656/1316126222/xyzzy [[email protected]] -=-=-=-=-=-=-=-=-=-=-=-
