CHART OF THE DAY: This Is Why They Called It 'The Great Moderation'

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Ben Bernanke is giving a lecture right now on the history of the Fed, specifically on the period between WWII and the financial crisis.

Anyway, there are two slides from the lecture that are really great, as they speak to the “great moderation”, from the mid-80s to the onset of the financial crisis.

This chart of GDP during this period, compared to the periods before really shows why this period was a) a moderation and b) convinced economists that they had figured everything out.

Whoops!

chart of the day, variability of real gdp growth, march 2012

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