Stanford Economist Blames Government for Crisis
on February 20th Stanford economist John B. Taylor will be publishing a book analyzing the financial collapse. According to the book’s current home on the web at Stanford’s Hoover Institution’s website, the book will:
The author tells how unusually easy monetary policy helped set the crisis in motion, as interest rates at the Federal Reserve and several other central banks deviated from historical regularities. He explains monetary interaction with the subprime mortgage problem, showing how the use of these mortgages, especially the adjustable-rate variety, led to excessive risk taking. In the United States this was encouraged by government programs designed to promote home ownership, a worthwhile goal but overdone in retrospect. Looking ahead, the author suggests a set of principles to follow to prevent misguided actions and interventions in the future.
The book already has rave reviews from several leading intellectuals, like Anna Schwartz, who, with Milton Friedman, authored The Great Contraction, 1929–1933. Schwartz writes:
If Milton Friedman and I had written as persuasive an analysis as this, one year—rather than 30 years—after the Great Depression began, the United States might have had a typical recession rather than the greatest downturn in history.
We at CEI eagerly await the arrival of what is sure to be a very illuminating book.