Tuesday, January 19, 2010

The fed funds rate: Too low for too long?

Here's an interesting graph. It shows the fraction of the time in each decade that the real fed funds rate was negative, i.e. the nominal fed funds rate was below the inflation rate. In the 1970s, we had significant consumer price inflation. In the 2000s, we had a credit bubble.

1 comment:

  1. Bernanke defended low interest rates during the 2000's. He's either stupid or clueless. Before his first confirmation his attackers said that "he doesn't know that he doesn't know." I'm beginning to believe their concerns now.