It's heady stuff, it explains with great ease why Ben Bernanke so publicly lusted to fill Alan Greenspan's chair, but it also speaks volumes about why our economy remains rather limp. Indeed, the allocation of global capital hinges on the thoughts and actions of people who are regularly wrong. By definition.
As the Wall Street Journal's Jon Hilsenrath and Phil Izzo noted on Monday, "In every year of the economic recovery, the Federal Reserve has overestimated how fast the economy would grow." Some might respond that Hilsenrath and Izzo are nitpicking, that the world's foremost central bankers are being judged on a small sampling of numbers, but then John Allison was Chairman of BB&T Bank for 20 years up to 2009. Writing about the Fed in his essential book, The Financial Crisis and the Free Market Cure, Allison observed that "In my career, the Fed has a 100 percent error rate in predicting and reacting to important economic turns."
http://www.realclearmarkets.com/articles/2013/06/19/all_eyes_are_on_the_fed_and_thats_the_problem_100409.html
The fatal conceit - that so few are willing to admit that even the gods of Wall Street don't know what the frock they are doing.
As the Wall Street Journal's Jon Hilsenrath and Phil Izzo noted on Monday, "In every year of the economic recovery, the Federal Reserve has overestimated how fast the economy would grow." Some might respond that Hilsenrath and Izzo are nitpicking, that the world's foremost central bankers are being judged on a small sampling of numbers, but then John Allison was Chairman of BB&T Bank for 20 years up to 2009. Writing about the Fed in his essential book, The Financial Crisis and the Free Market Cure, Allison observed that "In my career, the Fed has a 100 percent error rate in predicting and reacting to important economic turns."
http://www.realclearmarkets.com/articles/2013/06/19/all_eyes_are_on_the_fed_and_thats_the_problem_100409.html
The fatal conceit - that so few are willing to admit that even the gods of Wall Street don't know what the frock they are doing.
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