So far, economists have been quiet following the release on Thursday of Federal Reserve meeting transcripts from 2006. This was, of course, when things began to go very wrong for the U.S. housing market and economy – but judging from comments from Fed officials now making the rounds, they were pretty clueless about the extent of the downturn and its likely impact on the economy.
If you believe that the Fed is the know-all about the economy and uses the right monetary tools at the right time to set things right, you might want to check those assumptions. Calculated Risk has a good summary of some of the more obvious bloopers, lifted from a New York Times Twitter Feed. A few samples:
Mishkin, Sept. ‘06: “The excesses in the housing sector seem to be unwinding in an acceptable way... I’m actually quite positive.”
Geithner, Sept. ‘06: “We just don’t see troubling signs yet of collateral damage, and we are not expecting much.”
Lacker, Sept. ‘06: “I’m still fairly skeptical of large indirect spillover effects on employment or consumption.”
Bernanke, March 2006: “Again, I think we are unlikely to see growth being derailed by the housing market.”