Because the dealers were so highly leveraged and dependent on short-term financing, the uncertainty also led to serious liquidity strains, first at Bear Stearns and Lehman Brothers and eventually at most dealers – domestic and foreign owned. Bear Stearns and Merrill Lynch were acquired by existing bank holding companies after coming close to failure. Lehman Brothers went bankrupt.
Let me also illustrate that the upward bias appears to be different across income groups in the United States, by comparing expected income growth over the next year and corresponding expected inflation by high- and low-income groups.