What really happened in 2008? - by Scott Sumner

I believe that the Great Recession was caused by a tight money policy during 2008. Probably fewer than 1% of economists agree with me. Most blame the housing slump and the subsequent banking crisis. I recently gave a talk to a group of people at the Less Online conference in Berkeley. Because the audience was mostly composed of extremely bright non-economists, I thought it made sense to avoid a lot of technical data, and instead use analogies to explain why I held such a contrarian view as to the cause of the Great Recession of 2008-09. Here’s how I made my pitch. Consider this old anecdote: “Tell me,” the great twentieth-century philosopher Ludwig Wittgenstein once asked a friend, “why do people always say it was natural for man to assume that the sun went around the Earth rather than that the Earth was rotating?” His friend replied, “Well, obviously because it just looks as though the Sun is going around the Earth.” Wittgenstein responded, “Well, what would it have looked like if it

I believe that the Great Recession was caused by a tight money policy during 2008. Probably fewer than 1% of economists agree with me. Most blame the housing slump and the subsequent banking crisis. I recently gave a talk to a group of people at the Less Online conference in Berkeley. Because the audience was mostly composed of extremely bright non-economists, I thought it made sense to avoid a lot of technical data, and instead use analogies to explain why I held such a contrarian view as to the cause of the Great Recession of 2008-09. Here’s how I made my pitch. Consider this old anecdote: “