[EconProf]

Occams Realtor,

You have a point, and the speed of info transmission along with an alarmist media adds to the volatility.
The many bank panics of the nineteenth century often brought down perfectly good banks. They just did not have the liquidity on hand to meet the bank runs by a panic driven public inflamed by a rumor. The Fed was created in large part to temporarily lend to such a bank to squelch the panic.

[EconProf]

Occams Realtor,

You have a point, and the speed of info transmission along with an alarmist media adds to the volatility.
The many bank panics of the nineteenth century often brought down perfectly good banks. They just did not have the liquidity on hand to meet the bank runs by a panic driven public inflamed by a rumor. The Fed was created in large part to temporarily lend to such a bank to squelch the panic.

[EconProf]

Occams Realtor,

You have a point, and the speed of info transmission along with an alarmist media adds to the volatility.
The many bank panics of the nineteenth century often brought down perfectly good banks. They just did not have the liquidity on hand to meet the bank runs by a panic driven public inflamed by a rumor. The Fed was created in large part to temporarily lend to such a bank to squelch the panic.

[EconProf]

Occams Realtor,

You have a point, and the speed of info transmission along with an alarmist media adds to the volatility.
The many bank panics of the nineteenth century often brought down perfectly good banks. They just did not have the liquidity on hand to meet the bank runs by a panic driven public inflamed by a rumor. The Fed was created in large part to temporarily lend to such a bank to squelch the panic.

[EconProf]

The Great Depression was deeper and longer than it should have been for a variety of reasons, some already mentioned here. Trade dried up, thanks to our congress foolishly raising tariffs via the infamous Smoot-Hawley bill. The 1929 stock market crash was more symbol than cause of the economic contraction that followed it. A factor not yet mentioned is contraction of the money supply, stressed by no less a conservative than Milton Friedman. The Fed at that time did not know of its own power to stimulate the economy, and failed to use monetary policy properly. As a result, prices and wages fell precipitously; confidence was so low that even people and businesses with money hoarded what thay had and investment and consumer spending just dried up. This crowd psychology is what I worry about today, as people could panic and create runs on banks, food stores, etc. Bernanke is a student of the Great Depression, and seems determined to avoid “paralysis by analysis” by acting preemptively and forcefully.

[EconProf]

The Great Depression was deeper and longer than it should have been for a variety of reasons, some already mentioned here. Trade dried up, thanks to our congress foolishly raising tariffs via the infamous Smoot-Hawley bill. The 1929 stock market crash was more symbol than cause of the economic contraction that followed it. A factor not yet mentioned is contraction of the money supply, stressed by no less a conservative than Milton Friedman. The Fed at that time did not know of its own power to stimulate the economy, and failed to use monetary policy properly. As a result, prices and wages fell precipitously; confidence was so low that even people and businesses with money hoarded what thay had and investment and consumer spending just dried up. This crowd psychology is what I worry about today, as people could panic and create runs on banks, food stores, etc. Bernanke is a student of the Great Depression, and seems determined to avoid “paralysis by analysis” by acting preemptively and forcefully.

[EconProf]

The Great Depression was deeper and longer than it should have been for a variety of reasons, some already mentioned here. Trade dried up, thanks to our congress foolishly raising tariffs via the infamous Smoot-Hawley bill. The 1929 stock market crash was more symbol than cause of the economic contraction that followed it. A factor not yet mentioned is contraction of the money supply, stressed by no less a conservative than Milton Friedman. The Fed at that time did not know of its own power to stimulate the economy, and failed to use monetary policy properly. As a result, prices and wages fell precipitously; confidence was so low that even people and businesses with money hoarded what thay had and investment and consumer spending just dried up. This crowd psychology is what I worry about today, as people could panic and create runs on banks, food stores, etc. Bernanke is a student of the Great Depression, and seems determined to avoid “paralysis by analysis” by acting preemptively and forcefully.

[EconProf]

The Great Depression was deeper and longer than it should have been for a variety of reasons, some already mentioned here. Trade dried up, thanks to our congress foolishly raising tariffs via the infamous Smoot-Hawley bill. The 1929 stock market crash was more symbol than cause of the economic contraction that followed it. A factor not yet mentioned is contraction of the money supply, stressed by no less a conservative than Milton Friedman. The Fed at that time did not know of its own power to stimulate the economy, and failed to use monetary policy properly. As a result, prices and wages fell precipitously; confidence was so low that even people and businesses with money hoarded what thay had and investment and consumer spending just dried up. This crowd psychology is what I worry about today, as people could panic and create runs on banks, food stores, etc. Bernanke is a student of the Great Depression, and seems determined to avoid “paralysis by analysis” by acting preemptively and forcefully.

[EconProf]

The Great Depression was deeper and longer than it should have been for a variety of reasons, some already mentioned here. Trade dried up, thanks to our congress foolishly raising tariffs via the infamous Smoot-Hawley bill. The 1929 stock market crash was more symbol than cause of the economic contraction that followed it. A factor not yet mentioned is contraction of the money supply, stressed by no less a conservative than Milton Friedman. The Fed at that time did not know of its own power to stimulate the economy, and failed to use monetary policy properly. As a result, prices and wages fell precipitously; confidence was so low that even people and businesses with money hoarded what thay had and investment and consumer spending just dried up. This crowd psychology is what I worry about today, as people could panic and create runs on banks, food stores, etc. Bernanke is a student of the Great Depression, and seems determined to avoid “paralysis by analysis” by acting preemptively and forcefully.

[EconProf]

For sure we are in uncharted waters. I no longer know whether we are in for inflation or deflation. Recessions are fundamentally deflationary, and I think that will dominate our immediate future. OTOH, with the Fed and Treasury putting the printing presses on overtime, inflation may be inevitable in the long term.
I can say that today I converted my money market account into checking. No telling how long it will take the newly proposed FDIC-type program to apply to money market accounts, and their interest rates are puny anyway. I also fully withdrew my HELOC funds, in case the bank lowers it unilaterally. After all, at the bottom cash will be king, and the rush to liquidity has already started.

[EconProf]

For sure we are in uncharted waters. I no longer know whether we are in for inflation or deflation. Recessions are fundamentally deflationary, and I think that will dominate our immediate future. OTOH, with the Fed and Treasury putting the printing presses on overtime, inflation may be inevitable in the long term.
I can say that today I converted my money market account into checking. No telling how long it will take the newly proposed FDIC-type program to apply to money market accounts, and their interest rates are puny anyway. I also fully withdrew my HELOC funds, in case the bank lowers it unilaterally. After all, at the bottom cash will be king, and the rush to liquidity has already started.

[EconProf]

For sure we are in uncharted waters. I no longer know whether we are in for inflation or deflation. Recessions are fundamentally deflationary, and I think that will dominate our immediate future. OTOH, with the Fed and Treasury putting the printing presses on overtime, inflation may be inevitable in the long term.
I can say that today I converted my money market account into checking. No telling how long it will take the newly proposed FDIC-type program to apply to money market accounts, and their interest rates are puny anyway. I also fully withdrew my HELOC funds, in case the bank lowers it unilaterally. After all, at the bottom cash will be king, and the rush to liquidity has already started.

[EconProf]

For sure we are in uncharted waters. I no longer know whether we are in for inflation or deflation. Recessions are fundamentally deflationary, and I think that will dominate our immediate future. OTOH, with the Fed and Treasury putting the printing presses on overtime, inflation may be inevitable in the long term.
I can say that today I converted my money market account into checking. No telling how long it will take the newly proposed FDIC-type program to apply to money market accounts, and their interest rates are puny anyway. I also fully withdrew my HELOC funds, in case the bank lowers it unilaterally. After all, at the bottom cash will be king, and the rush to liquidity has already started.

[EconProf]

For sure we are in uncharted waters. I no longer know whether we are in for inflation or deflation. Recessions are fundamentally deflationary, and I think that will dominate our immediate future. OTOH, with the Fed and Treasury putting the printing presses on overtime, inflation may be inevitable in the long term.
I can say that today I converted my money market account into checking. No telling how long it will take the newly proposed FDIC-type program to apply to money market accounts, and their interest rates are puny anyway. I also fully withdrew my HELOC funds, in case the bank lowers it unilaterally. After all, at the bottom cash will be king, and the rush to liquidity has already started.

[EconProf]

Both Obama and McCain are in a contest to out-promise the other as to what they will do to help the “beseiged homeowner”.
Just once, at one of the debates or town hall meetings, I’d like to hear the following question from a renter in the audience:
“Mr. candidate, for years I’ve been saving up to buy a house, but they kept going up and were just out of my financial reach. But the last couple of years they fell and are now almost affordable. Will your administration let them fall more so I can buy?

[Author]

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