Jeffrey Rogers Hummel and David R. Henderson continue to argue that the Fed had little or nothing to do with fueling the housing bubble during the first five or six years of the present decade. Their latest article along these lines appears in Forbes. This is the third rendition of their argument that I have read, and I am no more persuaded now than I was previously.
Hummel and Henderson base their argument mainly on the claim that the Fed was not an engine of inflation between 2001 and 2006 because the rate of growth of the monetary base and the rate of growth of various monetary aggregates were declining during that period.
I keep coming back to various analogies, such as this one: I walk onto the street and I'm hit by a car going 50 mph; the next day, I walk out and I'm hit by a car going 45 mph;
my being hit repeatedly cannot actually have hurt me because each day the car that hit me was going slower than the one that hit me the day before
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