14 April 2010

Lies, Damn Lies, and Statistics, again

There is that old phrase, there are lies damn lies and statistics. Today AP released this story which contains a very bad lie. To wit:

The worry is that the Fed will repeat a mistake many economists believe the central bank made following the 2001 recession when it left interest rates too low for too long, fueling an asset bubble in housing that pushed home prices to record levels only to end with a disastrous crash that pulled the entire economy into a recession.

Earlier in the article, Volker is mentioned, since he wrung out inflation with extraordinary interest rates. I didn't keep the link, dang it, because I felt just so good, but Volker in the last few days was quoted as saying what I've been saying for years: the "asset bubble" wasn't that at all, but rather a futile attempt by the middle class to keep consumption levels steady in the face of falling median income by consuming housing appreciation. What's galling about this quote is that earlier in the article, the author does tell the reader about the income issue. Then blows it here. Ah well.

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