Economists against Fed

I think Bernanke was a voting Fed member while Greenspan was Chairman. From what I have read he fell in line behind the Maestro on his votes, so he wasn't just a bystander at the time.

 

Bernanke is just Greenspan on steroids. If you think Greenspan was a disaster, I don't see how you can think Bernanke will do any better. He is lowering interest rates/injecting liquidity to solve every problem, which is what his predecessor did.

If Bernanke were to raise interest rates more in line with the real rate of inflation, it would be a start. No doubt there would be pain for everyone in this country and times would be difficult. But it would pave the way for a solid foundation, rather than the quicksand we are currently standing on. We need to take some serious pain now, or else will we be FORCED to take the pain. In trader speak, we need to cut our losses now before we blow out later. Unfortunately, the probability that we actually take the pain willingly is close to zero. The Fed is certainly not going to do it and the politicians are clueless. This is why you must protect yourself from your own government, to protect any savings you might have left.

 

As for myself, my opinion at this point is that this entire forum needs to be retired and merged with the Politics & Religion forum, because it's a swamp of ignorance and malice and sheer viciousness as deep and wide as that execrable steaming POS.
I keep opening threads here and thinking a serious discussion of economics might break out. With very few exceptions, what I get instead is the display of bottomless ignorance I see in this thread.
Not a single one of you can count to three without straining what few brain cells you have. It's a wonder, as Lex Luthor said of Otis in the first Superman movie of the modern era (1978) that your brain can generate enough energy to move your legs.
You can now continue with your echo chamber. Me, I'm done with this so-called Economics forum. I'm confining myself from here on out to the Trading and Options forums, where at least I don't always feel like my intelligence is collapsing just from reading the comments.
Carry on.

 

Random Capital's comment makes it plain this topic does indeed go past economics to the legislative.

 

rather nice takedown of these so called economists:

The Wall St. Journal, and perhaps other outlets, published an open letter to Ben Bernanke pleading for the immediate discontinuation of QE2:

We believe the Federal Reserve’s large-scale asset purchase plan (so-called “quantitative easing”) should be reconsidered and discontinued. We do not believe such a plan is necessary or advisable under current circumstances.

The letter has 20+ signatories. It is noteworthy how outrageously wrong most of this team of incompetents were — on the recession, the credit crisis, and the markets; James Grant and Seth Klarman being notable exceptions.

Many of the names you will recognize (there are some I don’t) appear to have hard right conservative leanings. Paul Krugman takes down a couple of the signers, wondering what economic credentials William Kristol has (Or credentials of any sort for that matter).

Of course, one might level the same charge at another of the letter’s signers, former Bear Stearns economist David Malpass. BR has taken down Malpass here and here (to cite but two), but I don’t think Barry ever got to this one, in January 2008 (what we now know was the second month of the worst recession since the Great Depression):

Malpass’s message minimized the impact of both the ongoing U.S. housing recession and the credit crunch.

To an audience of guests representing top French financial institutions like BNP Paribas, Calyon and Natixis — all of which have been singed by the subprime crisis — Malpass sided with what appears to be a majority of U.S. economists in predicting that the U.S. economy would skirt the current crisis without falling into a formal recession.

“We will have a slowdown month by month for the next six months,” Malpass said. “But we will look back and we will say there was not a material recession.”

And here’s open letter co-author Kevin Hassett from the American Enterprise Institute (June 2008) in an article titled Seeing Recession When There’s None to Be Found, displaying near perfect partisan hackery, the lede of which was:

Are we in a recession? Despite what the media has led the public to believe, director of economic policy studies Kevin A. Hassett compares today’s economy to past recessions and finds that the current situation does not seem all that dire.

If a Democratic-leaning press can convince everyone that the economy is in recession, then it can influence the election. [...] The politically motivated pessimism, like the computer virus, can have real consequences.

I’d be remiss if I didn’t also note that Mr. Hassett was co-author of the timely (November 2000) howler Dow 36,000.

A third co-author, Michael Boskin, also did not see the recession that was already staring us in the face (October 25, 2007, emphasis mine):

LAS VEGAS (MarketWatch) — Despite severe problems in the housing market, a credit crunch and record-high oil prices, the U.S. economy will skirt a recession in the coming few quarters and get back on a solid growth path after that, economist Michael Boskin told real estate industry executives Thursday at the Urban Land Institute fall conference.

Another co-author who is uniquely unqualified to discuss recession (or anything economic for that matter) is Amity Shlaes. Back in July 2008, while we were into the 8th month of the recession — just weeks before the entire financial edifice collapsed — Shlaes wrote a Washington Post OpEd, titled “Phil Gramm Is Right.” Shlaes was defending Gramm, who had said “the country was not in a true recession but a “mental recession.” He also said, “We have sort of become a nation of whiners. (Nice call, superlative timing).

Charles Calomiris is yet another co-author. Up until 2007, he was the codirector of AEI’s Financial Deregulation Project; he spent the years since trying to blame Fannie Mae/Freddie Mac for the collapse, insisting that radical deregulation had nothing to do with crisis.

Peter Wallison is Calomiris’ co-author on this WSJ OpEd: Blame Fannie Mae and Congress For the Credit Mess, as well as the QE letter. As prime proponents of the radical deregulatory scheme that contributed so mightily to the credit collapse, they have desperately sought some other McGinty to blame for the crisis — anything but their own fecklessness. Wallison is, for lack of another adjective, hallucinatory.

Also on the list: Cliff Asness of AQR Capital Management is another co-author. According to Bloomberg, his flagship Absolute Return fund went the wrong way three years ago, as the credit crisis was starting, falling more than 50%.

So how’d those calls work out? Many of the people who are criticizing the Fed Chief aren’t capable of seeing the worst recession in generations halfway through it; Why on earth should anyone care what their views on Quantitative Easing might be? These people should be working at Mickey Dees, not think tanks and hedge funds.

Is this a crew to which Bernanke should be paying any attention whatsoever? This is not a time for our economic policies to be hijacked by partisan ideologues who, frankly, don’t seem to be offering up any viable alternatives.

http://www.ritholtz.com/blog/2010/11/dubious-open-letter-to-bernanke/

 

An article which attacks the people behind an argument and not the argument itself is useless.

 

really. if you were going to trust your life savings to someone would their past record have any bearing on the value of their future advice?

 

I think you have used a very exaggerated comparison to get your point across. The two situations are not equivalent.

I will take your argument and throw it back at you - so are you going to completely dismiss the argument presented against the Fed because of some of the participants involved? What about Jim Grant? Has he not repeatedly shown good financial judgement in the past?

 

i never said they were all bad or that i even disagree with the article. point being the fact that they had to include right wing demogogs like bill kristol to get 20 names is telling. either it is a right wing hit piece or they had trouble getting 20 mainstream economists to sign on.
i am sure someone could come up with 20 economists who think the fed is doing the right thing.