Comment Re:Reality Flip Switch (Score 1) 252
Was the Fed flooding the market with cash in 2007-08? I think it was the private banks that were creating liquidity (money) with those weird investment vehicles and loans. What the Fed failed at was not withdrawing money from the economy and running up interest rates to cool things down, but nobody wants an economic party pooper and they would have been savagely criticized for ending the good times.
Yes, and they still are. The interest rate is below inflation which means it is profitable for banks to loan money backed in random crap, because random crap appreciates at the rate of inflation. That is what subprime morgages was, and what is still happening because they are still allowed to loan under inflation.