While the Fed could not stop asset prices from soaring, its interest rate moves contributed to an economic downturn. This disconnect threw into sharp relief the mispricing in the asset markets. The crash of October 1929 was then followed by waves of bank failures. On the occasion of Milton Friedman’s 90th birthday, the then Governor Ben Bernanke conceded: "Regarding the Great Depression.
These effects from the greater price flexibility and increased competition in domestic markets that have arisen from globalization, while theoretically plausible, are often at variance with salient features of the world economy, and so they do not explain why inflation has declined in recent years.