When Jerome Powell recently reflected that “we could have—and perhaps should have—stopped asset purchases sooner,” he understated one of the most consequential policy missteps of modern monetary history. His further claim that “the extent to which these [mortgage-backed securities] purchases disproportionately affected housing market conditions…is challenging to determine” simply doesn’t hold up. The evidence is overwhelming: the Federal Reserve’s massive pandemic-era MBS buying helped supercharge one of the largest housing booms on record.
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