Mrs. Swartz is 92 years old and since 1941, according to the Journal, has worked at the National Bureau of Economic Research. Back in 1963 he co-authored “A Monetary History of the United States” with Milton Friedman. Suffice it to say… she knows more then a little about economic crisis. At a time when women’s voices are virtually absent from the financial debate, it is a gift to hear this thoughtful perspective.
So what does she think about how our central bankers and Treasury Department are doing? She thinks they are getting it wrong, again. Her arguement is that the primary problem is not one of liquidity, but credibility. Banks will not lend to each other because no one trusts each other, and so on down the food chain. Why would you lend to someone if you do not know with significant confidence that you are going to get paid back? Bottom line the issue right now is much more about solvency then it is liquidity.
This is a must read piece!