When the bubble bursts, the Fed and overseas equivalents will move to contain the economic damage, as the Fed did after the 2000 break.

Judge at the bursting of the housing and credit bubble Grantham described, roughly 2007-2009. True: after the break, the Federal Reserve and central banks in other major economies (e.g. ECB, Bank of England, Bank of Japan) took substantial easing or support action aimed at containing economic damage, such as rate cuts, liquidity facilities or asset purchases, as the Fed did with its 2001-2003 rate cuts. Mostly true: the Fed did so clearly, but overseas action was delayed or limited for some central banks. Mixed: only the Fed, or only overseas central banks, acted meaningfully. Mostly false: action was minor or token. False: central banks did not ease, or they tightened, in response to the break.

Set before the research began.

1. E1 [PDF] VI. Policy responses to the crisis- BIS 79th Annual Report - June 2009 Bank for International Settlements · June 2009

   “By the end of May 2009, the Federal Reserve, the Bank of Japan, the Bank of England, the Bank of Canada, Sveriges Riksbank and the Swiss National Bank had brought policy rates close to zero.”

2. E2 Part 3: Monetary Policy: Recent Developments and Outlook Board of Governors of the Federal Reserve System · 21 July 2009

   “Over the second half of 2008, the Federal Open Market Committee (FOMC) eased the stance of monetary policy by decreasing its target for the federal funds rate from 2 percent to a range between 0 and 1/4 percent”

3. E3 Economic prospects and the role of monetary policy in the current situation European Central Bank · 9 March 2009

   “Since October 2008, we have reduced key ECB interest rates by 275 basis points.”

4. E4 [PDF] VI. Policy responses to the crisis- BIS 79th Annual Report - June 2009 Bank for International Settlements · June 2009

   “Not all central banks had room to lower policy rates. A run on the currency forced the central banks of Hungary, Iceland and Russia to tighten policy in late 2008 despite declining inflation”

The Federal Reserve cut its federal funds target from 2 percent to a range of 0 to 1/4 percent in the second half of 2008 (E2). By May 2009 the Bank of Japan, Bank of England and several other central banks had also brought policy rates close to zero (E1), and the ECB had cut its key rates by 275 basis points since October 2008 (E3). Some smaller central banks (Hungary, Iceland, Russia) tightened under currency runs (E4), but the criteria refer to major economies, and those central banks eased substantially.