Meltdown Post Mortem Ad Nauseum

The Fed continues to be grilled over whether it caused the mortgage meltdown via low interest rates, or allowed it via lax bank supervision.  Here's the latest:  Fed Transcripts Stoke Debate on Rates - NYTimes.com. 

So what's the answer?  They allowed it via lax bank supervision.  Those insisting the Fed caused the mortgage meltdown via encouraging low short-term interest rates don't understand (or don't want the public to understand) basic macroeconomics, and like to imply that the Fed has more influence on mortgage rates than it does.

FT.com - Kohn makes case for low interest rates

Outgoing Federal Reserve VC Don Kohn makes case for continued low interest rates, in support of Fed Chair Bernanke's position on the matter.  He's got it right. 

The recovery is real but fragile.  The few calls for increasing rates that are beginning to trickle out of other camps within and beyond the Fed are based upon a dangerous, destabilizing paranoia: that central banks must raise rates whenever they are low, simply because they might later be blamed (e.g., for the inflation that might happen or the low-rate mortgages that might be granted or the comparisons with Alan Greenspan that might be made) if they don't. - David