Fed Clueless, Just Following Japan

Alhambra: Unfortunately, It Was Only A Brief Moment of Clarity
Because of that intentional, self-limiting blindness the FOMC when confronted in 2007 with nothing they were familiar with did exactly as Greenspan admonished in advance. The FOMC especially under the staunchly unmovable Bernanke was left just making it up as they went (and failing time and time and time again). By the end of 2008, sifting through all the wreckage, what did they do? They followed Japan even though in June 2003 they had once declared everything that was supposedly wrong with Japanese QE.

...Governor Kohn was apparently unable to imagine how non-Japanese central bankers might also possess (if not only possess) great ability to undermine themselves and their assumed power; especially in situations where they should not be so sure what power they might actually possess in the first place, essentially the central point of this discussion in June 2003. Alan Greenspan’s warning at that meeting could easily be distilled as “make sure you can actually do what you say you can do before you actually have to do it.” Unfortunately, that would require honest assessment, which is something the Fed has demonstrated itself (over and over) never quite capable of producing. Instead, Kohn’s words might very well have been repeated by some other central banker in some other global hotspot criticizing Janet Yellen in 2014, 2015 and still in 2016. Apparently it was better to fail as the Bank of Japan failed then to do something with an actual chance of success – like let markets clear out imbalances while undertaking honest understanding of the actual run of banking and global money (and now its material deconstruction). It’s not like there hasn’t been ample time for this, inching closer every FOMC meeting toward a full lost decade despite that institution years before its start essentially warning itself not to do what it has done.

To date there have been no repercussions for any of this. They really don’t know what they are doing and these people will not stop no matter how far they sink us and how absurd they act in doing so. It reminds us once more why the recovery is now only political.
This brings to mind Japan's "mistaken" rate hike: Trichet, King Haunted by BOJ’s Premature Interest-Rate Errors
Japan’s woes, which began with the bursting of an asset bubble and extended beyond the “Lost Decade” of the 1990s, were a reference for central banks seeking to avoid its errors when battling the credit crisis. Ben S. Bernanke, now chairman of the U.S. Federal Reserve, said in 2003 Japan’s “performance is due almost entirely to a very poor monetary policy.”

Now some are looking to its track-record on withdrawing stimulus, with U.K. policy maker Adam Posen saying last month that colleagues should learn from Japan’s 2000 interest-rate increase, which “led to bad macroeconomic outcomes.”

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