Becker and Posner on the Fed

Gary Becker gives his take on Fed policy during this financial crunch. Richard Posner also comments, concluding as follows:

Studies in cognitive and social psychology have identified deep causes for the overoptimism, wishful thinking, herd behavior, short memory, complacency, and naive extrapolation that generate speculative bubbles--and that require heavy doses of reality to hold in check. Any efforts to soften the blow will set the stage for future bubbles.