Harvard Profs on the Fed

The Harvard Crimson interviews several Harvard economics professors about monetary policy. Before reading the article, guess which two of them offered these assessments:

“The most important thing [the Fed] does is respond to major financial crises,... Inflation is OK right now, and the economy is weakening...I think he should lower [the target for the Federal funds rate].”

“The subprime event is not that big a deal. It’s a small part of the economy. There will be some foreclosures, banks will lose money. That’s life. That’s capitalism. They took risks, and they lost. Policy should not bail out people for greed and stupidity, or their risk taking.”