When an inflationary gap is evident within the economy, prices increase without an increase in value. This is what happened with the housing industry in the mid 2000's. Many economists believe that the Federal Reserve had no control on the roll-out of the housing industry due the banking role and consumer's demand. However, others believe that the Federal Reserve should have increased rates to slow down the flow and 'cost' of money. In their perspective, this should have avoid the inflationary gap that the entire country (and world) experienced.

In your opinion, do you believe that the Federal Reserve was responsible? What role should they have played? Why?