'..Most of us strive to learn from our big mistakes.'<blockquote>'As noted above by the astute Stephen Roach, Dr. Bernanke played an instrumental intellectual role in crafting policy with Chairman Greenspan that fatefully nurtured the mortgage finance Bubble. In arguably history’s greatest monetary policy misadventure, the Greenspan/Bernanke Fed purposely ignored the unfolding Bubble, choosing instead to commit the Federal Reserve to aggressive post-Bubble “mopping up” strategies. Five years into the crisis, the extent of required “mopping up” remains an unfolding saga that will be analyzed and debated for decades to come. To be sure, the Federal Reserve’s framework for monetary policy cost-benefit analysis during the post-technology Bubble reflationary period (2002-2007) was an abject failure. Most of us strive to learn from our big mistakes.
..
I will first note that the Greenspan Federal Reserve was caught completely off-guard by the market excesses that their policies had nurtured back during the (then) aggressive 1992/93 reflation period. It's worth noting that the hedge fund community has expanded about 20-fold since, to a record $2.1 TN. Global derivatives markets have mushroomed to hundreds of Trillions. Importantly, derivatives markets as well as the global “leveraged speculating community” have continued to grow post-2008 crisis – only further bolstered by aggressive policy regimes. The failure of JPMorgan’s “whale” derivatives trades to garner the attention of regulators (prior to disclosure) does not inspire confidence that the Federal Reserve can satisfactorily gauge the amount of leverage or other risks that have accumulated in the amorphous world of global securities and derivatives markets.
..
Monetary policy will not resolve deep structural financial and economic issues in Europe – nor in the U.S., Japan, China or elsewhere around the world, for that matter. History informs us that it will likely make things worse..'
- Doug Noland,
Risk #3, August 31, 2012</blockquote>
'Who is really to blame for what is happening?'<blockquote><b>Five Questions</b><br />
<br /><ol>
<li>Did banks force people to take out loans they could not pay back, or did people do so voluntarily?</li>
<li>Who elects congress? </li>
<li>Do people make enough effort to understand interest rates, debt, the economic policies of politicians, exponential math and its implications, the untenable nature of public union pension plans and promises?</li>
<li>Do a significant number of people (if not the majority) get their economic views (assuming they have any economic views) from The View, Oprah, The Talk, or CNBC? </li>
<li>Why did PEW leave off the Fed and Fractional Reserve Lending from the list of answers? </li>
</ol>
<br />
<b>Two Bonus Questions</b><br />
<br />
<ol>
<li>Would the majority of respondents know anything at all about the Fed and Fractional Reserve lending had the PEW listed those options?</li>
<li>Who is really to blame for what is happening?</li>
</ol>
- Mike "Mish" Shedlock,
Who Do You Blame for the Woes of the Middle-Class? September 02, 2012</blockquote>
Context<blockquote>
(Electric Universe) - '..History speaks only to those people who know how to interpret it on the ground of correct theories.' - Mises'We have lived beyond our means..' - Governor Jerry Brown
Banking Reform</blockquote>