Quite a few macroeconomists have said the Fed caused or depeened the recession: http://bruegel.org/2016/02/blaming-the-fed-for-the-great-rec...

But it's also a bit philosophical, because any causal claim implicitly invokes a counterfactual. Like, if a bus drives off a cliff, was it the fault of the cliff or the bus driver who didn't respond quickly enough in trying to steer away? To me, common sense says that sometimes it's the cliff's fault and sometimes it's the driver's fault - the difference depends on how early the driver 'should' have known.

Yeah if by caused you mean could have acted more aggressively and quickly which would have reduced the depth and breadth of the recession than I've heard and agree with that.

It's just a weird use of the word caused that gives people the wrong impression a lot of the time. If I say "Fireman Rick caused that house to burn down" most people will think Fireman Rick is an arsonist and not necessarily that he didn't act swiftly and quickly to put it out. And then if you say most houses burning down were caused by firemen many people might get the wrong impression that if we got rid of the fire department less houses would burn down instead of more.

P.s. I know Milton Friedman is to blame for this terribly tortured use of the word.

Yeah, I totally agree. But on the other hand, if Fireman Rick's job is to put out the occasional small wildfire, and one day a small controllable fire starts but Fireman Rick says not "not my problem, I'm gonna stay home and play video games" and then that fire burns down half the state, there's a sense in which the fireman is to blame by choosing to abandon his job.

Or to give it more of a HN spin: if Rick's job was to run a website, but hackers broke in and stole all the plaintext passwords, it could be construed as partially Rick's fault for negligently storing the passwords in plaintext, even though the hackers were the ones directly responsible for the hack.

Yeah the Fed is screwing up massively when it comes to crises. They're keeping inflation too low(so they spend too much time trapped at the zero lower bound), and they're not as willing to engage in unconventional policy when the risks are clearly asymetric(a great recession is way more damaging than accidentally creating a little too much inflation temporarily)

FAS157 was the trigger for the recession. Look it up. Hindight is 2020 looking back. It's pretty evident. But yes interest rates higher and the risky investments almost certainly blew things up even more. FAS157 was the spotlight

We can debate if FAS 157 was “the” trigger but it certainly was not the cause.

Inflation has been way too high. Not uniformly, but chiefly housing where new money is introduced into the consumer realm.

In an inflation-neutral environment, one would expect the prices of manufactured goods to be trending slowly downwards. After all, producing something less expensively is exactly what economic competition leads to.

Housing, startups, art, cars, watches...pretty much everything collectible or rare has seen its value skyrocket since the great recession.

The big pool of money has been sloshing between asset classes for a while now, but it doesn’t get reflected in inflation metrics.

I think this is a combination of low interest rates making the opportunity cost of owning collectibles much lower and rising inequality driving up the purchasing power of collectors.

Well houses have gone up, but the price of housing (rent) have only gone up a bit.(except for certain markets driven by regulation and fundamentals)

If the government increased interest rates until inflation was zero unemployment would be twice what it is right now. And that seems like a high cost to pay for a neutral monetary base.

Inflation is an average. Sure, you can disagree on how to compute the average (what gets more weight) but then it gets pretty subjective and then the question is: too high compared to what?

I don't have the quote, but Alan Greenspan actually said the rapid lowering and raising of rates was part of the trigger. The financial environment was also not good, but they set it off:

https://en.wikipedia.org/wiki/Federal_funds_rate#/media/File...

Note the massive drop (stimulus) in the early 2000s. That pushed debt levels up and encouraged the crappy loans and all that. Then the rapid increase set it off. Home prices vary inversely with interest rates, so raising them rapidly cooled the market and put all that cheap debt under water.

Because we have 9 rate cuts before 0% interest, the ECB is at negative yield and so the BoJ?

The fed funds rate was around 4.5% in July of 2007 before the shit hit the fan. We need room to cut interest rates to spur growth when the next recession hits. 2.25% isn't a very big margin.

Because of the aging of the population and the consolidation of wealth the natural interest rate have fallen quite a bit. And you're right I think that's a big risk for the next recession.

But the only way to a higher nominal interest rate while keeping the same real rate is too raise the inflation rate to 3 or 4%.