Hello. I have been reading the articles here for a while. This is my first post.
I would like the Austrian take on the American economy during the Clinton years. Was there actual economic prosperity during this period of time as many believe, or was the success a bubble?
And secondly, what, if any, impact did the economic polices of Bill Clinton’s administration have on the recent financial crisis?
Thank you.
Welcome.
A large part of the economic prosperity under Clinton was due to Greenspan’s inflationism, which eventually created the largest bubble in the world (the one after the 2001 crash, which should have been much more severe). However, some of this bubblish activity did create real prosperity, as it funded technological innovation, which increased productivity per worker.
The deregulation of financial services under Clinton helped soften the recent financial crisis, as many banks that were not able to merge before, were now able to merge and lessen the pain during this crisis. The Clinton administration’s policies of expanding HUD funding and the role of Fannie and Freddie exacerbated the recent crisis.