In his Wall Street Journal article from March 11, 2009, former Fed chairman Alan Greenspan rejects the idea that the Fed’s low-interest-rate policy between December 2000 and June 2004 fueled the housing bubble, which in turn laid the foundation for the current economic crisis. (The federal funds rate was lowered from 6.5% in December 2000 to 1% by June 2003. It was kept at 1% until June 2004 when the rate was raised by 0.25%.) Greenspan holds that what matters for the housing market is long-term and not short-term interest rates. The Fed, however, doesn’t control long-term rates, argues the … Continue reading The Fed Did It, and Greenspan Should Admit It