I don't know about others, but when I see these types of interviews, I waffle between cringing and biting at the bit to ask a question. For example, when they say that QE2 was successful because it increased inflation, I want to follow up with the comment that unemployment is still above 9% and consumer confidence is plummeting! How can they say it worked? How can they be rationally talking about more of the same? Are they at all cognizant of the employment picture?
Then they go on and on about Fed forecasts and admit that they have been horrible. Their response "Wall Street forecasts have also been poor." So this is how we make policy? This is the basis of how they jerk around the price of money and create uncertainty in the business sector?
As you watch, ask yourself if they are aware of how bad the employment situation is. Over half of those out of work today have been unemployed for a long time. Furthermore, unemployment benefits are on the verge of being extended for a much longer time. And these former Fed officials talk as if we are in the economic environment of the 1980s.
Source: Wall Street Journal.
This is called being out of touch with reality.
ReplyDeleteI'm yet to see a fed official, current or past, who will admit he/she is wrong!
re: Interesting comment. As I jogged today I started to construct a blog post in my head. In the classroom sometimes I ask students (as part of our critical thinking exercises) what are the most strongly held beliefs. For example, one is that their parents are their parents. Then I ask them how do they know this. How do they know they weren't switched at birth and what evidence would it take for them to agree that the belief is false.
ReplyDeleteWell, you can imagine the ensuing discussion.
Anyways, along these line I wonder sometimes what it should take for policy makers to come to a realization that their models don't really work.
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ReplyDeleteThe more experts I listen to, the easier it is to conclude there are no experts, only people with opinions who are wrong as often as they are right.
ReplyDeletere: Grouch There is a lot to be said in the discipline of macroeconomics for letting the market correct the downturns. Although plenty lip service is paid to the virtues of the free market people don't really trust it.
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