Is Greenspan to blame for the financial crisis?
Some scholars say the Fed’s power is limited, others say that the Fed fueled the housing bubble, and their latest paper asserts that Greenspan’s policies (along with the actions of Fannie Mae and Freddie Mac, HUD, the FHA, and the CRA) were at the root of the financial trouble:
The actual causes of our financial troubles were unusual monetary policy moves and novel federal regulatory interventions. These poorly chosen policies distorted interest rates and asset prices, diverted loanable funds into the wrong investments, and twisted normally robust financial institutions into unsustainable positions.
They all agree with the idea that we should end the Fed, whether that means a gold standard or Friedman’s idea to replace political decision-makers with a computer.