Economic busts, that is? Robert J. Samuelson suggests as much in the latest Newsweek:
Viewed historically, what we experienced was a classic boom and bust. Prolonged prosperity dulled people’s sense of risk. With hindsight, we know that investors, mortgage brokers, and bankers engaged in reckless behavior that created economic havoc. We know that regulators turned a blind eye to practices that, in retrospect, were ruinous. We know that the Fed kept interest rates low for a long period (the overnight fed-funds rate fell to 1 percent in June 2003). But the crucial question is: why? Greed and shortsightedness didn’t suddenly burst forth; they are constants of human nature.
One answer is this: speculation and complacency flourished because the prevailing view was that the economy and financial system had become safer.
Who did not fall into this trap? The Austrians.
