…thought Bernanke and Co. were making an awful mistake by cutting interest rates? Is it still an awful mistake?
Bernanke was forward looking. He saw the threat of credit contraction while we (here at AF and elsewhere) were obcessing about inflation.
I dunno, did it work? Is the credit contraction due to interest rates or credit issues? What if Bernanke had said “The Fed is deeply concerned about the availability of credit but the cost of credit does not seem to be the problem. The problem seems to be valuation and the decimation of the balance sheets of the banking industry. We have the following plans to deal with these issues [some plans - they have come up with a few good ones but more are needed]. For the current crisis the Fed has abandoned the traditional “target rate” policy of providing liquidity and has replaced that with the following plan to ensure that adequate money is available to support bank’s financing needs [new plan]” But he didn’t do that, so we won’t know. Bernanke screwed this up just like everyone else, but he at least did a few things. He’s getting a C in my book.