“Never Even a Whisper” at Fed’s Open Market Committee Meetings
by ilene - April 13th, 2010 4:48 pm
Another excellent article by George Washington on regulatory capture and willful blindness displayed by the Fed on an ongoing basis. - Ilene
"Never Even a Whisper" at Fed’s Open Market Committee Meetings
Courtesy of George Washington
Ben Bernanke, William Dudley and Donald L Kohn are on the Fed’s Open Market Committee (FOMC).
They are also on the board of directors of the Bank for International Settlements (BIS) – often called the "central banks’ central bank". And Kohn is an alternate director for BIS.
Alan Greenspan, of course, was a BIS director for many years.
Dudley is also chairman of BIS’ Committee on Payment and Settlement Systems. (Tim Geithner – previously on the FOMC – previously held that post).
So there is clearly quite a bit of overlap between the two groups.
In addition, BIS’ chief economist – William White – and others within BIS – repeatedly warned the Federal Reserve and other central banks that they were setting the world economy up for a fall by blowing bubbles and then using "using gimmicks and palliatives" which "will only make things worse".
As Spiegel wrote last July:
White and his team of experts observed the real estate bubble developing in the United States. They criticized the increasingly impenetrable securitization business, vehemently pointed out the perils of risky loans and provided evidence of the lack of credibility of the rating agencies. In their view, the reason for the lack of restraint in the financial markets was that there was simply too much cheap money available on the market…
As far back as 2003, White implored central bankers to rethink their strategies, noting that instability in the financial markets had triggered inflation, the "villain" in the global economy…
In the restrained world of central bankers, it would have been difficult for White to express himself more clearly…
It was probably the biggest failure of the world’s central bankers since the founding of the BIS in 1930. They knew everything and did nothing. Their gigantic machinery of analysis kept spitting out new scenarios of doom, but they might as well have been transmitted directly into space…
In their report, the BIS experts derisively described the techniques of rating agencies like Moody’s and Standard & Poor’s as "relatively crude" and noted that "some caution is in
…
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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
Ilene is editor and affiliate program
coordinator for PSW. She manages the site