Zeev's Turnips Patch-No Politics (ZEEV)

[Ste]

The mistake the Fed made was introducing liquidity in advance of the feared Y2K computer problems.

So many people in the computer industry knew the Y2K panic was a scam. Yes, certain things needed to be sorted out, but the catastrophe feared by many was never coming.

Greenspan must have had some seriously bad advice on this. That is why we are now in an overcapacity situation where money has been spent on the wrong things and people have trained in to the wrong careers or have retired and are no longer part of the productive economy.

Raising rates later was not the problem. In fact, keeping them low has allowed the bad companies to remain in existence, which makes it harder for the good companies to survive.

I think the Safe Harbor Act can share some of the blame too.

Complaining about why the bubble burst due to high rates is silly IMO. The bubble burst because that's what bubbles do. Blame the factors that caused the bubble, or better still look ahead to what needs to be done to improve the economy. I agree with Zeev's suggestion to slowly increase rates.