Thursday, January 3, 2008
“Money without a brain can be a dangerous thing”
Bernanke's thinking goes like this: Problem: Low interest rates led to way too much lending Solution: Cut interest rates to encourage more lending Slashing rates to ease the credit crunch is like sticking a band-aid on a tumour. The tumour needs to be cut out, no matter how costly and painful. There's only one answer - house prices need to fall - a lot.