Follies At The Fed

In keeping with its policy of releasing transcripts with a five-year lag, the Federal Reserve Board just released the transcripts from its 2006 Open Market Committee (FOMC) meetings. There is much there to cause pain and amusement.

In the latter category, there is probably nothing that can beat Treasury Secretary Timothy Geithner (then the president of the New York Federal Reserve Bank) telling outgoing Fed Chairman Alan Greenspan:

“I’d like the record to show that I think you’re pretty terrific, too. And thinking in terms of probabilities, I think the risk that we decide in the future that you’re even better than we think is higher than the alternative.”

But there is more than obsequiousness on display here. There is also profound ignorance of the economy among the nation’s top economic policymakers.

Keep in mind 2006 is the year that the $8 trillion housing bubble hit its peak and began to deflate. In other words, this covers the period in which the Titanic hit the iceberg and began to take on water. But no one on this sinking ship is even thinking about the lifeboats.

There is no one in the eight FOMC meetings who suggests that the economy faces any serious turbulence ahead. There is not even discussion that a mild recession could be in sight.

continue at CounterPunch.com:

http://www.counterpunch.org/2012/01/19/follies-at-the-fed/

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