> We bailed them out by printing a lot of money.

We did. We created about $4 trillion. That just about neutralized the $4 trillion that evaporated in the crash, and the result was that we did not go through a deflationary collapse. You know that they did not create too much, because inflation was basically nothing for the next decade. It was flat until Covid.

Covid... yeah, that was inflationary.

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SoftTalker 7 hours ago | parent | next [-]

Thanks, that was a perspective I hadn't thought about. But still doesn't seem like that taught any lessons, other than the taxpayers will bail out our carelessness.

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irishcoffee 12 hours ago | parent | prev [-]

I appreciate your posts generally, you have a lot of good insights.

Do you think replacing that 4T was a good call? I'm struggling to see how it was the right play.

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AnimalMuppet 11 hours ago | parent [-]

I think it was a good call, yes. A deflationary collapse is incredibly damaging to the economy. The Great Depression was such a collapse, but there are others. The Panic of 1857, 1873, 1907... there's a long history of these.

The Fed avoided that. And they also avoided causing inflation. It was an amazing job of threading the needle. (One could argue that they caused a decade of stagnation, but in my view that was minor compared to the other options.)

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irishcoffee 10 hours ago | parent [-]

Thank you for the thoughts. Do you think if we had ripped the band-aid off then it would have been completely disastrous? I don't mind saying that this economy is frustrating, and it feels like we keep kicking the can down the road. I'm confident I'm not the only person that feels this way, and I'm quite open to being wrong here. My guts says there's just too much money sloshing around, and it gets vacuumed up, leaving the majority feeling like nothing changed.

I'm asking this in as non-confrontational way as possible, what am I missing?

	▲	AnimalMuppet 8 hours ago \| parent [-]
		I think you may be missing that $4 trillion evaporated in 2008, and the scale of the catastrophe that would have caused if the Fed did nothing. What the Fed did then was, essentially, restore the amount of money to what it was in 2007. They were trying to turn 2008 into as much of a "nothing changed" as they could, and they did it quite well. I think the economy can adjust to any amount of money; it's the abrupt change in the amount that causes problems (because it causes an abrupt change in the value of money). I think you may be missing that I'm not saying the same thing about the pandemic response. I think that too much money got poured in during the pandemic years, and that has caused inflation, and we've been seeing that inflation since. I wonder if you are taking how you feel about the last five or six years, and mapping that onto the last 18 years. Now, from 2008 to 2020 was not all roses. Things were kind of stagnant. The rich were probably doing better than you were, because assets like stocks and land went up in value as interest rates went down, but your wages didn't go up. So, it was reasonable for you to feel "there's too much money sloshing around" in things like stocks during those years. But I think it got worse after Covid. The government air-dropped too much money in, and there has definitely been too much money sloshing around since then. In all of this, I'm not really saying that you're wrong in feeling that there's too much money sloshing around, or that the economy is frustrating.