From San Francisco Fed President John Williams latest (my bolds):

Our economy is well into a period of sustained growth. It’s now been four years since the recession ended. Recessions are never pleasant, but this one was especially grim. Think back four years to June 2009. The housing market had collapsed. The unemployment rate stood at 9.5% and was still rising. Consumers and businesses were deeply shaken. And the stock market had plunged nearly 40%. Although things have improved quite a bit the economy has not rebounded from this recession as fast as we hoped. Growth has proceeded in fits and starts, and the overall pace of recovery has been moderate at best. Let me put the recent recession and recovery in historical context. Figure 1 illustrates this in terms of gross domestic product, or GDP, which is the nation’s total output of goods and services. The solid red line shows that real GDP per person, which is GDP adjusted for both inflation and population growth, had fallen a little over 5% by the second year of the recession, an extremely sharp drop by historical standards. Five years after the recession’s onset, real GDP per person had still not returned to where it had been before the recession. I can put this in perspective by comparing the recovery with data from recessions and recoveries in 17 advanced economies over the past century and a half (see Jordà, Schularick, and Taylor 2011). In the figure, the solid black line shows a projection based on this data of the average path real GDP per person takes in recessions and recoveries. Ninety-five percent of the time, GDP lies within the shaded region shown in the figure. As you can see, the most recent U.S. recession was one of the worst. To a considerable extent, that was because we went through a financial crisis of historic proportions. Research has shown that, when a financial crisis hits, the accompanying downturn tends to be unusually harsh. So the sharp plunge in GDP during the first two years of the recession may not be that surprising.

Setting up the ‘stage’ for the subsequent show-off of Fed heroics:

The surprise, it turns out, is the strength of the subsequent recovery. Now you may not associate the word “strength” with this recovery. So let me explain. The dashed red line in Figure 1 shows a forecast of real GDP per person for the five years following the start of the recession. This forecast is based on an economic model that aims to describe past recessions and recoveries based on a few key factors (Jordà, Schularick, and Taylor, forthcoming). According to the model, the enormous boom in private-sector credit before the recession—when credit was cheap and easy to get—was a major reason why the recession ended up being so deep. The model also predicts that the economy should have been virtually stagnant in terms of real GDP per person through 2012. In other words, the recovery has actually been stronger than might be expected given the extent of the prior credit buildup.

And here comes the ‘paramedics’:

So why has the economy done better than the model predicts after such a destructive financial crisis and credit collapse? One big reason is that economic policies put in place during and after the recession, including extraordinary measures taken by the Federal Reserve, lent critical support to the recovery. These policies pulled us out of the recession much faster and made the recovery stronger than would have happened otherwise. To be sure, the recovery has been weaker than we wanted. But the fact that we’ve made as much progress as we have is due to a great extent to these timely policy actions. Absent these actions, I fear that we could have experienced the stagnant economy the model predicts.

Really, urgently needed a ‘Bar Exam’ for Central Bankers.

PS The chart below compares NGDP relative to previous peak in 1937-39 and 2008-10. Many, for example, argue that the 1929-33 Great Depression was the result, as here, of “cheap and easy credit”. That surely was not the case in the 1937 crash, wholly due to bad monetary policy (gold sterilization and increase in required reserves). When those ‘restrictions’ were lifted, NGDP quickly rebounded.

So you could say that at present, monetary policy was not as restrictive as in 1937, but when the ‘paramedics’ took over, they were much less effective than the ones who acted in 1938!

It appears that the lessons of history were mostly forgotten.