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Over the years, there have been paradigm shifts as one gets used to a certain environment, which can shift drastically. For example, the transition from the 1920s to the 1930s shocked people. This shifting environment can lead to surprises as people extrapolate from past cycles, such as the easing of monetary policy and quantitative easing. It is important to step back and view history from a longer-term perspective to understand these shifts. The Federal Reserve made a mistake by assuming a normal cycle of growth, lower unemployment, and inflation as a result.
