Ummm, It Was the Central Bankers' Fault

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Tuesday, 03 August 2010 04:36

The NYT had an article on the hostility being directed toward the head of Hungary's central bank. The article implies that such hostility is misdirected, beginning the piece with the comment: "it’s not easy being a central banker in Europe — especially during the biggest economic crisis in a generation"

This comment is sort of like saying that it's not easy to be head of BP, especially in the middle of the largest oil spill in the history of the world. The reason that we are having the economic crisis is because of the failure of Europe's central bankers to notice the huge housing bubbles that were distorting economies throughout Europe and much of the world. If Europe's central bankers had been doing their job competently they would have acted to rein in these bubbles before they grew large enough to endanger the economy. Instead, they were obsessed with reaching their 2.0 percent inflation target.