SecondThoughts

Are Central Banks Out of Their Minds?

I say "yikes" when I read the writings of "icandoitdon". Its almost a waste of time to respond; he is so "out there" that he may be out of reach. But, I have a moment so I'll try to help him. First and most significantly, starting with the 1980s, "business cycles", also known as recessions, have been generally shorter in duration and, shallower. Maybe an exception is the prolonged slowdown of 2001 through 2003. But, even though that episode was longer, it was still billed by the NBER as comparatively short compared to recessions of the pre-1980s variety. Accepting, as he must, this thesis, one then asks why? Why have recessions become shorter/shallower? I think economic historians will look back on 1982 - 2000 as having been "good years" for two reasons: (1) significant technological advancement and (2) sounder monetary and fiscal policy. (Unfortunately, the second doesn't apply well to the current Bush administration.) To say that Greenspan and Bernanke have tried to "repeal" the business cycle is ridiculous; tame it yes. But, let's be clear what "icandoitdon" said at the outset: He doesn't "think central banks are out of their mind." But, then, he goes on to explain a point of view that is exactly the opposite??!!