<blockquote>'After the dotcom bust in 2000, the U.S. Federal Reserve, under the leadership of first Alan Greenspan and then Ben Bernanke, drove borrowing costs down to disastrously low levels, Dirt-cheap money encouraged U.S. consumers to gorge on debt, dramatically increasing the risk of widespread mortgage defaults.'
- Dr. Gary Hammel,
What Matters Now (2012), page 11</blockquote>
'Belief that a bunch of central planners can sit in a room and divine interest rates and the proper amount of money in circulation is as ridiculous as belief that Russian central planners could properly set the price and quantity of steel or orange juice.'<blockquote>'Central bankers
Debating the Limits of Power in Jackson Hole are wondering what's holding back the economy.
<blockquote>' "What is holding the economy back? Why is it that we've had such incredibly accommodative monetary policy for so long (but) we've had so little growth? I think it remains a puzzle," said Donald Kohn, who is now a senior fellow at the Brookings Institution think tank in Washington.
Adam Posen, who finished his final day as a member of the Bank of England's monetary policy on Friday and is a powerful advocate for more forceful central bank action, asked the same question as Kohn: "Why has all this lower short-term interest rates failed to make the economy go go go?" He argued that policymakers in Europe and the United States should waste no time in extending asset purchase programs to spur growth.
Alan Blinder, another former Fed vice chair who now teaches economics at Princeton, ticked off the two most blatant culprits for why the U.S. economy continued to struggle: government spending cuts and the drag from the depressed housing market.'</blockquote>
Central bankers and economists are so wrapped up in warped mathematical formulas they fail to understand the obvious. The answer, which they refuse to accept, or even consider as a possibility, is that central bankers and the monetary system itself are the problem.
Belief that a bunch of central planners can sit in a room and divine interest rates and the proper amount of money in circulation is as ridiculous as belief that Russian central planners could properly set the price and quantity of steel or orange juice.
The boom-bust cycles of ever-increasing amplitude benefiting the 1% while hollowing out the middle class should be poof enough central bankers do not know what they are doing.
That they met in Jackson Hole wondering why their policies are not working is also sufficient proof they do not know what they are doing.
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Following the 2001 recession, the Greenspan Fed held interest rates too low too long, allowing one last party. And it was the party-of-a-lifetime, culminating in the biggest housing and credit bubbles the world has ever seen.
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It is disconcerting yet entirely predictable that central planners and government bureaucrats cannot see what the root problems are. After all, no one wants to blame themselves.
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Since central bankers cannot and will not admit the truth, they are left scratching their heads asking easily explainable questions like "
What is holding the economy back?"
- Mike "Mish" Shedlock,
Central Bankers Fail to Understand Forces Holding Back the Economy; Ten Major Economic Headwinds, September 04, 2012</blockquote>
Context<blockquote>
'Do people make enough effort to understand..'‘..they lost any sense of … real people..’'..a private law society..' versus '..a “great band of robbers,”..''..ethics in particular .. absolute principle of ethics..' - '..deze fundamentele ethiek..'Banking Reform</blockquote>