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ORIGINAL: DesideriScuri

The Congressional Report on the Great Recession fingered the Federal Reserve for not catching it and stopping it. Imagine that. An agency that is supposed to prevent that stuff, didn't.

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ORIGINAL: Musicmystery

quote:

ORIGINAL: DesideriScuri
The Congressional Report on the Great Recession fingered the Federal Reserve for not catching it and stopping it. Imagine that. An agency that is supposed to prevent that stuff, didn't.

Of course the Congressional Report did -- because they otherwise would have to accept responsibility.
The Fed Chairman warned in 2001 that the Bush Tax cuts were "reckless and irresponsible" -- and then Bush added two wars. However, Congress did NOTHING to address the fiscal shortfalls, insisting that magic money would flow in and create growth that would bring in the revenue to cover the excesses. Instead -- the deficit and the national debt ballooned again.
So the Fed addressed this with monetary policy, effectively buying us out of two recessions by continually making money cheaper. Still, Congress never addressed fiscal policy. So, when interest rates were near zero, that band-aid was gone -- the Fed at that point has only more drastic tools (changing bank reserve requirements, for example) which would be worse than the recession. Hence -- the 2008 recession. Add to that the SEC mortgage bundling derivative fiasco, making effective financial health analysis impossible, and suddenly money and credit and trust dry up, just when the cost of hanging on to cash is very low.
What did Congress do then? Address the structural deficit?
Naw...doubled down and stupidity, and issued a Report.
Without the Fed's actions, the 2008 recession would have happened in 2003.

quote:

ORIGINAL: DesideriScuri

quote:

ORIGINAL: Musicmystery

quote:

ORIGINAL: DesideriScuri
The Congressional Report on the Great Recession fingered the Federal Reserve for not catching it and stopping it. Imagine that. An agency that is supposed to prevent that stuff, didn't.

Of course the Congressional Report did -- because they otherwise would have to accept responsibility.
The Fed Chairman warned in 2001 that the Bush Tax cuts were "reckless and irresponsible" -- and then Bush added two wars. However, Congress did NOTHING to address the fiscal shortfalls, insisting that magic money would flow in and create growth that would bring in the revenue to cover the excesses. Instead -- the deficit and the national debt ballooned again.
So the Fed addressed this with monetary policy, effectively buying us out of two recessions by continually making money cheaper. Still, Congress never addressed fiscal policy. So, when interest rates were near zero, that band-aid was gone -- the Fed at that point has only more drastic tools (changing bank reserve requirements, for example) which would be worse than the recession. Hence -- the 2008 recession. Add to that the SEC mortgage bundling derivative fiasco, making effective financial health analysis impossible, and suddenly money and credit and trust dry up, just when the cost of hanging on to cash is very low.
What did Congress do then? Address the structural deficit?
Naw...doubled down and stupidity, and issued a Report.
Without the Fed's actions, the 2008 recession would have happened in 2003.

Um, did tax revenues rise? They most certainly did. And, they continued to rise, reaching historic levels under Obama (who didn't cancel any of the Bush tax cuts for 4 years).

Did spending rise? It most certainly did.

So, the GOP's claim that revenues would increase was... wait for it... correct. That they increased spending is definitely on the GOP's shoulders. I don't pretend otherwise.

I've said for quite some time now, that the Federal Reserve's near zero interest rate on money has caused quite a bit of damage and has made the situation worse, including helping fuel bubbles.