[Because of the 1 per cent interest rate in 2003/04] the United States and the world began an extended credit expansion and housing boom. From July 2003 to July 2006, the monetary base in the United States increased at an average annual rate of 4.9 percent, credit increased at an annual rate of 9 percent, and housing prices increased at an annual rate of about 14 percent. The long-term consequences of that policy are now well known. The United States and the world have just suffered one of the worst recessions in decades.
Source: Thomas Hoenig, President of the Kansas City Federal Reserve, Speech March 2011 – London School of Economics
Taken From: Speech Notes by Frank Trotter: The Prospects for Fiat Currencies (Everbank Executive VP)
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