Where is this credit crunch, recession, housing bust, whatever, heading? Here is an interesting read with a nice review the history of recessions, inflation, and how the Fed deals with slowdowns. Let us know what you think by posting a comment.
“…economic slowdowns usually trigger massive reflationary responses from the Fed that reignite inflation. Such was the response in 1958, then again in 1970 (not described here), in 1974, 1980, 2001, and currently in 2007-2008. Anytime the Fed has responded by massively reflating the economy, the typical result has been stagflation. In essence, by reflating the economy, the Fed prematurely aborts the bust (recession) part of the cycle and its beneficial adjustment processes and quickly drives the economy back to its pre-recession inflationary levels.”
http://www.financialsense.com/editorials/petrov/2008/1024.html
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