On Sunday, we discussed Fed Chairman Ben Bernanke’s view that monetary policy played no role in the extraordinary bull market in real estate during 2002-2007. The operative quote from his speech: “Monetary policy during that period [2002-2006] — though certainly accommodative — does not appear to have been inappropriate, given the state of the economy and policymakers’ medium-term objectives.”
A number of monetary economists beg to differ. Among the smoking guns: a negative inflation-adjusted Fed funds rate for three years from late-2002 onward.