One normally does not look at the Minutes of the Meeting of Central banks for a glimpse at the lighter side of life. But, the loss is ours. We might be missing gems such as this one, from the Minutes of the Meeting of the Federal Reserve Open Market Committee held in August.
Participants generally saw the degree of uncertainty surrounding the outlook for economic growth as having risen appreciably. A couple noted that the cyclical impetus to economic expansion appeared to be weaker than it had been in past recoveries, but that the reasons for the weakness were unclear, contributing to greater uncertainty about the economic outlook. [Full Minutes here].
‘Reasons for the weakness were unclear’?! – Why, have not they studied the histories of countries recovering simultaneously from credit, housing and banking booms and busts? Have not they read Reinhart and Rogoff’s book? What is so inexplicable and unclear about the weakness?
In fact, it is unclear to the rest of us as to why they should be surprised by it. Did they seriously believe that they could wave their policy wands and bring about a magical recovery in the US economy that is so different from what the rest of the world had experienced over centuries? The probability was low not just because of the nature of credit and housing busts but the previous US economic expansion (2002-07) was a shallow and weak one. The median household income in the US has declined since 1998. Unprecedented for any prior US economic expansions.
The arrogance and hubris laced with ignorance of and indifference to history boggles the mind. By ushering in another round of monetary stimulus in their September meeting, they will not only be demonstrating these qualities to the world one more time but they would be extracting a heavy price out of the rest of the World for their policy experiments.