How the Fed failed to prevent the housing bubble

Why the Fed's policy of monetary tightening was a farce. And why the housing bubble burst will be worse than many imagine.

There is total detachment from the bad news now pouring out of the US economy. For several years, the booming housing market has made the difference between recession and recovery for the US economy. Zooming house valuations provided private households with the collateral that allowed them to replace the missing income growth with a borrowing binge.

But as the housing market is sagging, this major source of higher consumer spending is plainly drying up, and most obviously and importantly, income growth is by no means catching up.

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MoneyWeek is written by a team of experienced and award-winning journalists, plus expert columnists. As well as daily digital news and features, MoneyWeek also publishes a weekly magazine, covering investing and personal finance. From share tips, pensions, gold to practical investment tips - we provide a round-up to help you make money and keep it.