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QUOTE OF THE DAY #2….From Brad DeLong, trying to figure out what the hell has happened to the economy:
“A 3% decline in aggregate asset values should not be a big problem for the macroeconomy. Yet it is.”
To me, the answer appears to be related to derivative speculation. But that is probably too simpleminded. My own personal simplemindedness aside, however, it scares me that the world’s most sophisticated economists don’t seem to know what the answer is either.
On the other hand, as near as I can tell, we still don’t know for sure what caused the Great Depression or even the Black Monday crash of 1987. So maybe we’ll never really know with this one either.
