In 2002, worried about the “jobless recovery”, PK “voted” for a house bubble (to replace the “internet bubble”):
The basic point is that the recession of 2001 wasn’t a typical postwar slump, brought on when an inflation-fighting Fed raises interest rates and easily ended by a snapback in housing and consumer spending when the Fed brings rates back down again. This was a prewar-style recession, a morning after brought on by irrational exuberance. To fight this recession the Fed needs more than a snapback; it needs soaring household spending to offset moribund business investment. And to do that, as Paul McCulley of Pimco put it, Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble.
In 2005, he “predicted” the house bubble pop:
Now we’re starting to hear a hissing sound, as the air begins to leak out of the bubble. And everyone – not just those who own Zoned Zone real estate – should be worried.
And he gets incensed when “accused” of not having “predicted” something:
Dean Baker is annoyed, and rightly so, at claims that Keynesians failed to predict the slow recovery. Dean and I were both tearing our hair out in early 2009, warning that the Obama stimulus was too small and too short-lived.
No matter that the slow recovery had little or nothing to do with the size of Obama´s “stimulus”. How do we know that? Because the “drive towards austerity” beginning in 20010, whose epic moment was the 2012-13 “fiscal cliff”, did not make a dent in real growth, which kept humming along at a (low) 2.2% clip during the last four and a half years!
And folks, that was and is.99% due to monetary policy!