This article offers an analysis of the causes of the subprime crisis, explaining that it is not an isolated incident and that we should concentrate our attention on the Fed’s monetary policy and pressures on the banking system received from the U.S. government for flexible lending. It also critically examines the Fed’s exit strategy and fiscal policies that the government is taking to create jobs and stimulate the economy. We conclude that it should be no surprise if the U.S. economy should fall into a new cycle in the coming years, even though economics does not provides the tools to predict the precise timing of it.
- housing bubble,
- Federal Reserve,
- business cycle,
Available at: http://works.bepress.com/adrian_ravier/1/