Thursday, November 5, 2015

Jeff Hummel is a smart one

Dave Henderson quotes the guy: Once the Great Depression is thrown out as a statistical outlier, we observe no significant change in the frequency, duration, or magnitude of recessions between the period before and the period after that unique downturn. Given that the Great Depression witnessed the initiation of extensive government policies to alleviate depressions and that the Federal Reserve had been created fifteen years earlier explicitly to prevent such crises, this overall historical continuity with a single exception indicates that government intervention and central banking has done little, if anything, to dampen the business cycle.
We can make a deeper statement.  Stabilizing actions by the Fed or by G would result in a more random arrangements of recessions.   If not, then the Fed and G are part of the cycle.

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