Publicity Hounds

Another day of central bank insanity. Even the Fed’s Plosser expressed concern yesterday:

Market participants focus entirely too much on how the central bank may tweak its policy, and central bankers have become too sensitive and desirous of managing prices in the financial world. I do not see this as a healthy symbiotic relationship for the long term.

Oh but they love being in the spotlight, taking credit for saving the world and raking in those $250,000 fees for a short after-dinner speech that says nothing (Bernanke). It is shameful, especially when they don’t even understand how banks work.

When this ugly bubble finally collapses, there should be a deep re-examination of not only the professional skills and responsibilities of economists but also the wisdom of economic intervention when so little is knowable about the potential outcomes. Use of “knowable” is intentional – from an epistemological point of view you must accept that there is much which is literally unknowable. Not that it is hard to know – it is mathematically impossible, like 2+2=5. Check with Kurt Gödel for full details. It’s tough to make predictions, especially about the future (variously attributed to Piet Hein, Niels Bohr and Yogi Berra).

But in the meantime, it drags on and on. And on. And of course the internal damage to the economies of the world accumulates with every added day of malinvestment, where resources are wasted on non-productive activities that essentially reduce the capital stock available for future growth.

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