The Fed is clueless. Fed Chair Ben Bernanke now describes the condition of the economy as “unusually uncertain,” a descriptive phrase fogged up enough to have been invented by his predecessor, Alan Greenspan.
The Fed has little idea what the economy is doing or why. Mr. Bernanke, despite his pomposity, has not foreseen anything with reasonable accuracy. As Mish points out:
Ben Bernanke was pretty certain there would not be a recession, that housing was not in a bubble, that the unemployment rate would peak at 8.5%, that paying interest on reserves would enable the Fed to hold short-term rates above 2%.
Bernanke was wrong on every count. At least now he admits he is guessing.
The Fed’s behavior is entirely consistent with what Friedrich Hayek termed “the fatal conceit.” Bernanke either foolishly believes he is capable of managing the economy or is trying to maintain the myth that government can manage the economy. In Mr. Bernanke’s case, it is likely a bit of both.
To be fair to Mr. Bernanke, no one is capable of doing what he cannot do. It is not possible! To pretend otherwise is Mr. Bernanke’s sin, not his failure to succeed.
Meredith Whitney is Half Right
Why The Economy Will Not Recover
John Williams Warns of Imminent Hyperinflation
Government-Assisted Economic Suicide
Critical: Gold Investment Considerations
Some people inside the Fed may be clueless, but the people behind the Fed know very well what they are doing… It is up to the people to understand that the Fed’s interests may not be the people’s interests.
Also liked the article on Hayek and the pretence of knowledge. It is rare that Kuhn is mentioned but his work on how scientific theories take up is seminal.
Great site.
Does anyone remember “Voodoo Economics”? We are now witnessing Voodoo Economists controlling the U.S. economy, including the Fed. What a bunch of phonies!!!!!!!