I wouldn’t say that I’m a heady optimist, but I think there is a danger of repeating the mistake that many of us made during the boom: extrapolating current trends to make decisions about the future, failing to take into account how rapidly economic circumstances can change. There’s a risk that we may again overshoot the mark: As the economy goes down, we could be overemphasizing the negative just as we exaggerated the positive on the way up.The most dangerous thing you can do in economics is simply extrapolate, and that is what most economists do. Cassidy's observation is right on, outside of my own view that the economy will turn around much quicker than most expect, he is the only one that seems to understand the extrapolation fallacy.
Cassidy then goes on to create a laundry list of reasons why the economy could turnaround faster than most expect. Most of his reasons belong, well, in the laundry. But he also hits on the winner and main reason this recession will be over in months instead of years:
... we have the Federal Reserve...injecting money into the financial system at a rate never seen before.My (Sort Of) addendum to his original title to his article, The Case for Optimism, is because the economy will "recover" sooner than most expect, but ultimately the result will be an enormous growth in the inflation rate, and that is nothing to be optimistic about at all.
