Stocks Rally Sharply On Tuesday

Overview Of Macroeconomic Trends

The chart below is a great depiction of the economy since 1992. Obviously, this is just one index, so it doesn't capture everything. The macro implied volatility index shows that the economy was relatively stable from 1992 until 2002. There were some modest spikes, but nothing major. The recession in the early 2000s was very shallow. Then from 2004 until 2007, Alan Greenspan's easy money policy crashed volatility which eventually led to the financial crisis since his policies helped stoke the housing bubble. The massive rate cuts were from 2000 to 2004 which is right when the housing bubble heated up. Therefore, his policies amplified the bubble instead of suppressing it. monetary policy gets part of the blame for the huge bust in 2008.