The U.S. response to the financial crisis probably prevented a depression, slowed a decline in gross domestic product and saved about 8.5 million jobs, economists Alan Blinder and Mark Zandi said.
Policies including the government fiscal stimulus, bailouts of financial companies, bank stress tests and the Federal Reserve’s purchase of mortgage-backed securities to lower interest rates “probably averted what could have been called Great Depression 2.0,” Blinder and Zandi said in a report dated yesterday. Without those measures, the U.S. would have deflation, they said.
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Comment: Well, probably, it is correct what Blinder and Zandi say. Yet what if when there hadn't been a depression anyway? Then the massive debt accumulation would have been a complete waste. And what if when the Great Depression II was only postponed?
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