What I Saw and Did Not See About the Macroeconomic Situation Eight Years Ago: Hoisted from the Archives
Hoisted from the Archives from June 2008The Macroeconomic Situation, with added commentary:(June 2008):
Looking back, what did I get right or wrong back eight years ago when I was talking about the economy? I said:
- That the best way to think about things was that we were in a 19th-century financial crisis, and so we should look way back to understand things (RIGHT)
- That a recession had started (RIGHT), which would probably be only a short and shallow recession (WRONG!!!!)
- That the Federal Reserve understood (MAYBE) that it has screwed the pooch by failing to prudentially regulate shadow banks, especially in the housing sector (RIGHT), but that it would shortly fix things (MAYBE).
- That the Federal Reserve was still trying to raise interest rates (RIGHT).
- That the Federal Reserve should not be trying to raise interest rates (RIGHT), because the tight coupling between headline inflation today and core inflation tomorrow that it feared and expected had not been seen for 25 years (RIGHT).