Rethinking the Great Recession

The story of the Great Recession has been all about crime and punishment when it should have been about boom and bust. The boom did not begin with the rise of home prices, as is usually asserted. It began instead with the suppression of double-digit inflation in the early 1980s, an event that unleashed a quarter-century of what seemed to be steady and dependable prosperity. There were only two recessions, both of them short and mild. Unemployment peaked at 7.8 percent. As inflation fell, interest rates followed. The stock market soared.