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How Government Created the Financial Crisis

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Consistent with Hayek's theory [2], Stanford University economist John Taylor argues in today's Wall Street Journal that the current financial crisis was caused by government [3].  His case is strong.  Here's a key paragraph:

Monetary excesses were the main cause of the boom. The Fed held its
target interest rate, especially in 2003-2005, well below known
monetary guidelines that say what good policy should be based on
historical experience. Keeping interest rates on the track that worked
well in the past two decades, rather than keeping rates so low, would
have prevented the boom and the bust. Researchers at the Organization
for Economic Cooperation and Development have provided corroborating
evidence from other countries: The greater the degree of monetary
excess in a country, the larger was the housing boom.

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