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Liberal Economist Calls For Housing Bubble In 2002


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The basic point is that the recession of 2001 wasn't a typical postwar slump, brought on when an inflation-fighting Fed raises interest rates and easily ended by a snapback in housing and consumer spending when the Fed brings rates back down again. This was a prewar-style recession, a morning after brought on by irrational exuberance. To fight this recession the Fed needs more than a snapback; it needs soaring household spending to offset moribund business investment. And to do that, as Paul McCulley of Pimco put it, Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble.

The New York Times

It doesn't seem to me, like that worked out very well. But then again, I'm not an economist, let alone a Nobel prize winning economist like Mr. Krugman. :rolleyes:

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It doesn't seem to me, like that worked out very well. But then again, I'm not an economist, let alone a Nobel prize winning economist like Mr. Krugman. :rolleyes:
The column was published in August 2002. If Krugman was predicting a recession that started some six years after his column was published, then allow me to predict now a rise in the Dow-Jones. In 2017, or 2021, when my prediction comes true, will you give me credit?

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Krugman is a sad case. He first became what he once criticized, an economist who indulged in over-simplification, and then he became a partisan political hack.

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