Why the Economic Crisis Was Not Anticipated

By RICHARD A. POSNER

An article in the October 11 New York Times attributed the almost universal failure to anticipate our current economic crisis to "insanity" — more precisely, to a psychological inability to give proper weight to past events, so that if there is prosperity today we assume that it will last forever, even though we know that in the past booms have always been followed by busts. But experts on the business cycle, such as Federal Reserve Chairman Ben Bernanke, are not confined to basing