Re: 30-year Treasuries, Fed policy and the 2001-? recession

[Paul Davidson <pdavidson@xxxxxxx>]

At 10:18 AM 7/21/03 -0700, you wrote:
>  Henry: interesting and informative post, most of which I agree with except
> your comment below that all the post-WWII recessions EXCEPT for this one was
> caused by the Fed tightening monetary policy.  The Fed raised rates in 1999
> and 2000, which was probably one of the factors leading to the downturn,
> right?
>
> It reversed its policy quickly as it saw the recession developing of course,
> and it is likely that a recession would have occurred at some time w/o the
> move toward higher rates, since profits were falling, excess capacity was
> showing up, etc., but still - consider the timing.


Good point, Chris. I have argued that all post war recessions has been the
result of deliberate
Fed policy-- Perhaps most of the past ones have been as a preemptive strike
against the inflationary "WMD" and the last one, an attempt by Greenspan to
same the irrational exuberance in the equity markets.
Paul
Paul Davidson
Editor, Journal of Post Keynesian Economics
Economics Department - 523 SMC
University of Tennessee
Knoxville, Tennessee 37996-0550
phone # (865) 974-4221
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