Bank Failures and Economic Myths: Insights from Reagan's Adviser and Nobel Laureate.

Former economic adviser to President Ronald Reagan, Steve Hanke, believes that the Federal Reserve's contractionary policies have contributed to the current banking crisis and that the central bank is poised to bring more pain. Hanke argues that the Fed's fixation on the Phillips curve, which portrays inflation and unemployment as contrary forces, is faulty and does more harm than good. He also thinks that the Fed's policy of quantitative tightening has gone too far and may lead to a recession or banking bloodbath. Hanke deems the government's promise to assist failed banks unwise, arguing that society should not be forced to subsidize the financial risks assumed by others.