Economist Greg Mankiw confesses: I love the Federal Reserve. And I suspect that, in their heart of hearts, most other economists love the Federal Reserve, too.
A "neutral" interest rate cannot be observed through any statistical test or public policy. But central bankers are sure they can find it and use it to endlessly tinker with the economy.
Attempts at stabilizing the economy distort economic signals and cause economic instability, rather than preventing it.
Global EconomyWorld HistoryOther Schools of Thought
Money and BanksMoney and Banking
Expansionary monetary policy causes economic recessions. It doesn't cure them.
Joseph Salerno discusses the Hoppean method of addressing economic controversies.
Given the Fed has never spotted a bubble in real time, why should anyone believe we aren't in one right now?
The real problem was the money supply inflation that happened during the boom phase. Combating deflation in the bust phase only superficially treats a symptom of the boom-bust cycle.