This is a great post by rsj, The Great Unravelling:
“Which eras are those of moderation, and which are those of excess volatility? What did the central bank succeed in stabilizing as a result of relying on interest rate adjustments rather than income flow adjustments?”
The charts are extremely interesting. In many ways, the great moderation was not moderate at all, and the charts show this in great detail.
The great moderation- or the smoothing in global output growth – came at a cost. Was this cost too high? It’s easy to make this argument.
rsj makes a great point about what really matters to people: “And, more troubling, long term unemployment, which is what people really fear:” and shows long term unemployment went up, up, up during the great moderation.
Mark S’s points out the Great moderation is defined to exclude the two biggest problems in its time frame. Mark is right, but this is a way proponents of the Great Moderation cheat.
It’s a must read, simply for the data dump.