Sunday, September 15, 2013

One bank to topple them all

This is the 5th anniversary of the bankruptcy of Lehman Brothers; I'd like to point out that the economic shock that caused the recession occurred precisely in September (at least in the information transfer model).

It was this large shock coupled with the relatively high information transfer index at the time which rendered monetary stimulus ineffective that led to our current predicament. In the graph below, aggregate demand perturbations are in blue while monetary perturbations are red.


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1 comment:

  1. Jason SmithFebruary 27, 2014 at 6:18 PM

    Another possibility is that the Fed caused it:

    http://informationtransfereconomics.blogspot.com/2014/02/the-fed-caused-great-recession.html

    ReplyDelete

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