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from The Gray Area:
During the debates and other Obama campaign speeches, we constantly here about how we don’t want to go back to the policies that got us in this economic situation.’ He and the media blame generic “Bush era” policies, but the facts are much different. The Carter era Community Re-investment Act”, advanced by the Clinton administration in 1995 changing rules that Government Sponsored Enterprises’ (Fannie Mae, Freddie Mac and Ginnie Mae are the three main GSEs) to encourage more lending in poor neighborhoods, then exacerbated further Fannie’s CEO, Franklin Raines, Barney Frank and Chris Dodd to require Fannie Mae and Freddie Mac to lend money to anyone who wanted a house in order to generate more profits for the GSE’s, which created a desperate need for banks and Wall Street financial companies to find creative ways to make money on the bad paper being forced upon them. GW Bush asked 17 times to fix this problem, but the Congress and the “just say no” Democrats who controlled it from 2007-2010, let the system fail. Irresponsible Congress and misdirection to an easy target by Obama and the Democrats. And here we are. Now we have other evidence, Boom & Bust Banking, about Federal Reserve mismanagement before, during and ?after? the crisis.
The twenty-first century opened with optimism, as first technology and then housing boomed, but by the end of the decade confidence had been drained. In the United States, the epicenter of the Great Recession, output fell, unemployment skyrocketed, and budget deficits exploded. Why, after several decades of economic stability, did the boom-and-bust cycle return with such force?
Most studies that attempt to answer this question neglect perhaps the single most powerful actor in the world economy today: the Federal Reserve. Boom and Bust Banking, edited by David Beckworth, remedies this deficiency by shifting the focus back to the U.S. central bank and showing the leading role it played in creating the Great Boom and the Great Recession of the 2000s.
Aimed at professional economists and readers well versed in the basic workings of the economy, Boom and Bust Banking offers cutting-edge diagnoses and prescriptions from some of the leading lights of the economics profession. Parts I and II show how Federal Reserve monetary policy caused the boom and bust of the 2000s. Part III offers innovative proposals to avoid future cycles of boom and bust.
Read More: Boom & Bust