Friday, January 18, 2013

Fed failed to predict 2008 recession

"If you want to feel confident that the Federal Reserve knows where it's going as it steers the world's biggest economy, then you probably should not read the transcripts of its 2007 policy meetings.
Those transcripts, released on Friday, show a Fed groping blindly for answers about the early market tremors preceding the financial crisis, while also blithely deciding that everything was probably going to be just fine.
In what may be the most glaring example of the Fed's forecasting failure, its economists declared at the December 2007 policy meeting that the U.S. would avoid a recession, despite a slowdown in housing and turmoil in financial markets that was getting worse all the time. As we now know, the worst recession since the Great Depression began that very same month, according to the National Bureau of Economic Research. In less than a year, the financial system would be on the brink of total collapse.
The Fed didn't see it coming."


Bill Morris said...

The Fed or any central bank which really believes it can predict with any certainty future economic developments are deluded and misrepresenting their capabilities.
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Podoloski advani said...

This article is mind blowing I read it and enjoyed. I always find this type of article to learn and gather knowledge.

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