WSJ report, 2010.

Mr Greenspan's "simmer down" quote, vintage 2003, here. And he said it again for good measure two years later adding, with the remarkable prescience that has become his hallmark, that "prices could even decrease".

Little sign in those speeches of all that political pressure to extend credit which he referred to yesterday.

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2 comments

  1. SMU Cox Web Site // 4/28/2010 05:57:00 PM

    It is amazing to me that banks thought that they could lend money to people walking in off the street and self-reporing 500K or more in annual income.

    I'd like to see the loan officers that issued the mortgages charged.

  2. Anonymous // 8/31/2010 01:12:00 AM

    Bernanke likes to remind everyone that he is an expert on the great depression and knows how to prevent it from happening again in the US. Apparently he is also an expert on Japan and its struggle with chronic deflation following its housing bubble in the 1980's. In fact Bernanke wrote an article in 2000 titled "Japanese Monetary Policy: A Case of Self-Induced Paralysis," where he goes on to lecture BOJ officials about what they could and should have done differently in order to to avoid a deflationary outcome. He goes on to postulate that the BOJ was not trying hard enough to stimulate the economy and that 0% interest rates are just one tool to beat deflation. The Fed Chairmen even goes so far as to assert that he knows how to escape a liquidity trap caused by 0% interest rates. The reason I bring this up is because it gives people a good idea of what Bernanke's next move may be. The US is dangerously close to falling into the dreaded "liquidity trap" as deflation takes hold and monetary policy loses its effectiveness.

    Here are some of his suggestions to the BOJ:
    http://blackswaninsights.blogspot.com/2010/08/bernanke-explains-how-to-escape.html

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