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Home Publications Blogs Beat the Press Excuse Me WSJ: But the Fed Was Responsible for the Economic Crisis

Excuse Me WSJ: But the Fed Was Responsible for the Economic Crisis

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Wednesday, 16 June 2010 08:10

In the world of Washingtonspeak, history gets rewritten right in front of your eyes. No doubt we will soon discover that the environmentalists were the ones drilling off the coast of Louisiana.

In the spirit of the historical rewrite, Michael Crittenden tells readers in the WSJ blog Real Time Economics that: "the Fed has been a top target for criticism and skepticism following the government’s response to the 2008 financial meltdown."

Uh no, that's not quite right. The Fed has been a top target of criticism because the people running the Fed, Alan Greenspan and Ben Bernanke, could not see an $8 trillion housing bubble, the collapse of which wrecked the economy. This was one of the most astounding acts of economic incompetence of the last century. The fact that the Fed's response to the financial turmoil caused by the collapse of the bubble seems more focused on saving Wall Street than the economy has not helped its standing.

 

Comments (6)Add Comment
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written by izzatzo, June 16, 2010 11:51
Let the Salem Fed Witch Trials begin. Having observed peculiar seizure symptoms by Farmer Bernanke, otherwise known as Quantitative Sneezing and Usury Extraction, he is obviously responsible for the drought and land shortage and shall brought before the Magistrate of Puritan Deficit Hawks for appropriate zero sum punishment, an eye for an eye, etc.

So, Mr Evil Incarnate, what did you know and when did you know it? It wasn't really caused by the bubble was it. It all started after that, when you fell into sin and disavowed the principles of Puritan Zero Sum Giving and Taking wasn't it. We have witnesses who saw you buying up useless cows and land with fiat money printed on a Gutenberg Press, so don't even bother pleading that money is neutral. We're all Keynesians now. So there.
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written by Tao Jonesing, June 16, 2010 12:52
The Fed saw the bubble. It just purposefully ignored it because Wall Street makes a lot of money off bubbles.
And...
written by scathew, June 16, 2010 9:12
And in it's own special way the WSJ was also responsible for the crisis by being an unremitting cheerleader for laissez-faire governance that helped lead us into this mess...
Reporting the Facts
written by A, June 17, 2010 10:32
Just as is the case with your complaints about reporters and politicians, you should only report that those people did not warn of the bubble. You can't say they didn't see it.
Up, sometimes, is down.
written by Anthony, June 17, 2010 12:40
Dean-

I would agree that the following statement sounds outrageous:

"In the world of Washingtonspeak history gets rewritten in front of eyes. No doubt we will soon discover that the environmentalists were the ones drilling off the coast of Louisiana."

However, you can always count on Sarah Palin to make the world just a little more ridiculous. Following the Deepwater explosion and spill, she said this, in her own inimitable way:

"Extreme Enviros: Drill, Baby, Drill in ANWR--Now Do You Get It?"

Her point is that environmental activists have forced oil companies into riskier activities, like deep-water drilling, when there is an abundant supply of "easy-to-reach" oil in places like the Arctic National Wildlife Refuge. Of course, you must ignore for a moment the patent rewriting of history implied by her statement--that somehow the "drill, baby, drill" mantra was actually an argument for safer, more environmentally responsible drilling.

So, Dean, in effect, the right is claiming that environmentalists, by preventing oil companies from drilling inland, are the ones drilling offshore. Companies like BP are merely giving environmentalists what they've been demanding.

And you thought you were being absurd.
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written by Eric Laursen, June 22, 2010 9:01
In re: "In the world of Washingtonspeak history gets rewritten in front of eyes. No doubt we will soon discover that the environmentalists were the ones drilling off the coast of Louisiana...."

In fact, that's quite close to what conservatives say. In a recent column, the WSJ's Holman Jenkins (I always read him when I want the corporate spin on anything) stated that environmentalists and government regulators were ultimately responsible for the Gulf disaster. That's because they badgered BP relentlessly to shift its attention to clean-energy projects and technologies, which forced the poor company to take its eye off the ball - that is, away from its proper job of extracting oil in the most efficient way possible. If these meddlers hadn't been doing their best to distract BP, this never would have happened.

Simple, right?

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.

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