Daily Archives: May 6, 2014

By William K. Black

Greetings form Guayaquil, Ecuador where I’m teaching a mini-course at ESPOL.  The course introduces students to the great economic debates of theory that shaped our dominant fiscal, monetary, and anti-regulatory policies in the decades before the financial crisis.  Memory can be a tricky and misleading guide, so I went back to what the key decision makers and theorists were saying in the years before the crisis.  My focus is on Ben Bernanke and Alan Greenspan, but I also discuss extensively John Williamson, who coined the phrase “the Washington Consensus.”  (My readers know that I attribute many of the most damaging anti-regulatory policies to the Clinton-Gore administration and its evisceration of effective regulation through its “Reinventing Government” program.)  I wanted readers to see what was being said by the Fed’s leadership (which would soon transition from Greenspan to Bernanke) as the financial world was exploding into an orgy of “accounting control fraud” (the most destructive in history) that was hyper-inflating the largest financial bubble in history, and about to cause a global financial crisis that produced the Great Recession and (if Bernanke is to be believed) would have produced another Great Depression but for the largest financial bailout in history.

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