Robert P. Murphy writing for the Ludwig von Mises Institute, a Libertarian economic think tank at Auburn University, stated that the US is on track for "the worst recession in 25 years."
On September 18 the Fed cut its target for the fed funds rate by 50 basis points (0.5 percentage points), from 5.25% to 4.75%. The move surprised many analysts who had been expecting a more modest cut of 25 basis points.
For those versed in the Austrian theory of the business cycle, as developed by Ludwig von Mises and elaborated by Friedrich Hayek, the aggressive Fed "stimulus" is ominous indeed. Not only will it pave the way for much higher price inflation than Americans have seen in decades, but it will also exacerbate what could be the worst recession in twenty-five years.
Now most of those on the left side of the political/economic line are not normally in agreement with those like Mises and Hayek. However, we have all been reading and agreeing with many of our great economic bloggers here at DailyKos that this move by the Fed will more than likely speed us to recession. So there is agreement by both school of thoughts that we are not on the correct path economically in this country.
Robert Murphy's conclusion sounds very familiar to that of some of our bloggers.
From 2001–2004, the Fed kept (real) rates at the lowest they've been since the late 1970s. One of the consequences that has already manifested itself is the housing bubble. But a more severe liquidation seems unavoidable. The recent Fed cut may postpone the day of reckoning, but it will only make the adjustment that much harsher.
My only question now is, if there is so much agreement on both sides of the aisle, then why are those that could do something about it, doing anything?