FOMC: Maybe They Should Meet for an Entire Week?

The Federal Open Market Committee announced earlier today that they are extending their December 15th meeting for another day "to allow additional time for discussion" on the many ills of the American economy and its sickly financial markets.

This comes after Wednesday's release of the minutes from the last two-day FOMC meeting on October 28th and 29th where projected economic growth was lowered dramatically and the forecast for 2009 unemployment was ratcheted upward, from 7.1 percent to 7.6 percent.

Will another day make any difference?

Maybe they shouldn't meet at all.

Jim Rogers may have had it right when asked some time ago what he would do if he ran the Fed. The famed investor replied, "I'd abolish the Federal Reserve and go home".

On a related note, Fed Vice Chairman Donald Kohn gave a speech the other day in which he stuck to his guns regarding asset bubbles. It's pretty much the same story - can't see 'em, can't be sure that we can stop 'em, and can't be sure that it would do any good if we did.

In short, we still do not fully know what caused the run-up in house prices and over-building. Short-term rates were low in 2002-04 as the Federal Reserve countered the risks it saw to good economic performance, and these low rates probably had some effect on housing markets at the time. But the problems largely built up after policy rates were well on their way to neutral, and other factors appear to have played major roles.
...
In sum, I am not convinced that the events of the past few years and the current crisis demonstrate that central banks should switch to trying to check speculative activity through tighter monetary policy whenever they perceive a bubble forming. The recent experience may have made us a bit more confident about detecting bubbles, but it has not resolved the problem of doing so in a timely manner. Nor has it shown that small-to-modest policy actions will reliably and materially damp speculation. For these reasons, the case for extra action still remains questionable, despite our having learned that the aftermath of a bubble can be far more painful than we imagined.

He then goes on to note that the Fed needs to understand financial markets better and do a better job of regulation.

This cartoon from the Telegraph comes to mind:

Comments

[Smarty_Pants:]

Jim Rogers was right. The FED should close up shop and go home. Things would work out better in the long run that way.

2008 Nov 21 10:49 AM

[moonbat1775:]

Why are there bubbles? Why wouldn't there be bubbles since the Fed and fractional reserve banking make honest saving a losing proposition?

2008 Nov 21 11:08 AM

[Did U Think...:]

Ron Paul should get credit as the original fed basher. He has been doing this for 30 years. It is wonderful to see his old videos on youtube where he is saying the same things today as back then:
-sound money
-stick to the constitution
-less gov't
-more freedom

I just want to know why America can't understand the simple, uncomplicated genius of that man.

2008 Nov 21 12:48 PM

[PainfullyAware:]

Ron Paul doesn't seem so crazy anymore.

Wish more people would have debated him rather than dismissed him.

Debate IS The Distillation Of Reality.

Nobody listens to the prophets until it is too late.

Rogers is a Bow Tie Wearing Money Maven. I dig his realism and patience.

2008 Nov 21 06:19 PM

[Robert Nabloid:]

Smart is dead on.

2008 Nov 25 01:30 AM