How Is It Possible The Fed's Image Can Be Tarnished Further?

At this point it should be universally known that the Federal Reserve Board has been guilty of disastrous incompetence. It allowed an $8 trillion housing bubble to grow unchecked. The inevitable collapse of this bubble has produced the worst downturn since the Great Depression and ruined the lives of tens of millions of people across the country.

This is why it was striking to read a Washington Post headline for an article on newly released Fed transcripts that showed that Greenspan and the rest of the Fed were completely oblivious to the bubble and the risks it posed to the economy as late as 2006:

At this point, the Fed should not have an image that could possibly be tarnished further. If its record had been reported accurately, everyone would be well aware of its incredible incompetence as a manager of the economy.

btw, as noted in the article, many of the people at these Fed meetings are still in top policy making positions. This shows that the U.S. economy still produces good-paying jobs for people without skills.

Addendum: This is what people who were not Greenspan sycophants were saying at the time. And, here's another blast from the past.

Hear Hear Dean Baker!
written by David B. Schuster, January 13, 2012 6:35 AM

The Fed's dual mandate states that they are to maintain price stability and high employment. They have failed in both regards. How can they continue to justify their existence?

GO RON PAUL!
written by izzatzo, January 13, 2012 7:46 AM

...its [Fed] incredible incompetence as a manager of the economy.

...
written by PeonInChief, January 13, 2012 9:00 AM

I read the NYT report on this in my local paper this morning and thought, I wonder if Dean Baker is grinding his teeth at this one this morning.

already tarnished
written by Peter K., January 13, 2012 10:18 AM

They should be embarrassed. So should complicit media companies and academia. But they have no shame.

Ron Paul is loco when it comes to economics among other things. He gives off an aura of authenticity which is appealing to the ignorant. Lower-class rightwingers are gravitating towards him which is why you see opportunists like Gingrich and Perry slamming corporate raiders and vulture businessmen. When things got really bad in Germany, gullible rightwingers went with the authentic-sounding Nazis and destroyed their country.

-2

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written by eric, January 13, 2012 11:39 AM

I agree. They are clubby, sycophantic idiots, and should all be fired. The one thing I can say in their defense is that almost no one, including you, Dean, was foreseeing the tripling of the price of oil between january of 2007 and July of 2008 (from about $50 to about $150). A lot of the Fed guys said at those meetings that they were encouraged by the easing of energy prices, and they hoped and expected that that easing trend would continue. It seems possible to me that had they known that oil prices would triple in the next 18 months, they might have been a bit more worried.

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written by BroD, January 13, 2012 12:10 PM

Department of discussions in quiet rooms.

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written by Luke Lea, January 13, 2012 1:52 PM

Given all the Chinese reserves in search of investment, was there anything the Fed could do to raise long-term interest rates?

Imbalances with China may be at the root.

SAINT MITTENS 2012!
written by Oodlepuff, January 13, 2012 4:20 PM

@BroD: "Department of discussions in quiet rooms."

LATTER DAY SAINT MITTENS!

He's surging, he's invincible, he's the greatest thing since sliced white bread, the media love him, he's got great hair, he's got 5 kids, he's rich but let's not talk about that except you know where:

SAINT WILLARD MITTENS BAIN LBO EL MEXIQUANO FALSO QUIET ROOMS CAPITALIST ENVY ROMNEY!!!!!!!

He was for before he was against it before he was for it before he was against it! Take that, Obambi!

Who is speaking for SAVERS?
written by gordon, January 13, 2012 4:57 PM

Jim Rogers said the Fed is going to lose a generation of savers due to ZIRP and DEBTOR BAILOUTS. No way and who cares about saving is how the younger generation thinks now. The Fed imo, is committing a Crime against Humanity, while 3 million seniors in the last 5 years went into poverty, SOME DIED not buying medications, due to lost interest on savings. Hoening is gone, the Fed is now stacked with more DOVES, FOR GOD'S SAKE! This is a conspiracy of historical proportions, I ask YOU and SOMEONE to speak out against this. The banks could easily double rates on CDs and still make a ZERO RISK PROFIT, swapping collateral with the Fed and who know what other corrupt game with accounting, like Regions Financial recently.

Advisor to the working class
written by solonsays, January 13, 2012 8:48 PM

We can curtail the Fed tomorrow by imposing a gambling tax on speculation and the use of leverage. A one penny tax on every dollar of leverage on the books would raise several trillion dollars of tax revenue.

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written by Union Member, January 13, 2012 10:27 PM

if only it were possible to tweet this to all the unemployed - especially those who given up looking for work or fallen out of the workforce (i.e. EPOP)

many of the people at these Fed meetings are still in top policy making positions. This shows that the U.S. economy still produces good-paying jobs for people without skills.

Who was responsible for polishing this image to begin with?

Oil?
written by David F. Snyder, January 15, 2012 8:30 PM

Re: the comments on oil by eric, above. Speculation on energy supplies is older than this country. The crash of oil prices from $150 a bbl back to it's $50 per bbl level didn't wreck the economy and was relatively short lived. The housing bubble built up over a longer period and we are not out of the woods yet on it; why the Fed would have been more concerned with a run in a commodity market than with a depeletion of reserves due to a housing bubble does not make sense, of course they'd ignore the commodities blip, just like they ignored the one 18 months ago (and rightly so).

How Is It Possible The Fed's Image Can Be Tarnished Further?

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