I just discovered the Carl Menger Center for the Study of Money and Banking that is apparently run by Paul-Martin Foss who was a staffer for Ron Paul during his Congressional years. For anyone interested in economics and Federal Reserve stuff, you should follow it. It is brand new and it looks like their first post was this month. The first piece I read was the “FedSpeak Translated.” Here is an excerpt.
Ever find yourself listening to a Federal Reserve Chairman and trying hard to keep your mind from drifting to something more interesting? Me neither. But while most of the media was trying to glean tidbits about upcoming monetary policy decisions from Chairman Yellen’s speech at the IMF, they missed some pretty important statements. Here are a few that I picked out and translated into everyday English to make them more accessible to the layman.
Although it was not recognized at the time, risks to financial stability within the United States escalated to a dangerous level in the mid-2000s. During that period, policymakers–myself included–were aware that homes seemed overvalued by a number of sensible metrics and that home prices might decline, although there was disagreement about how likely such a decline was and how large it might be.
TRANSLATION: Nobody remembers what I said back in the mid-2000s and these journalists are too lazy to go back and fact-check my record, so I can get away with saying this. They’re not going to watch Peter Schiff’s video about me, in which he demonstrates within the first ten minutes that I had no clue during the mid-2000s that there was a housing bubble.
Nor will they read the speech I gave in January 2007, stating that “While the decline in housing activity has been significant and will probably continue for a while longer, I think the concerns we used to hear about the possibility of a devastating collapse—one that might be big enough to cause a recession in the U.S. economy—have been largely allayed.”
And they definitely won’t read my speech from February 2007, in which I said that “I believe that a soft landing is the most likely outcome over the next year or two.”
Or the speech from April 2007 in which I said: “While a tightening of credit to the subprime sector and foreclosures on existing properties have the potential to deepen the housing downturn, I do not consider it very likely that such developments will have a big effect on overall U.S. economic performance.”
And I really hope they don’t find my prediction from July 2008, less than three months before everything imploded: “I expect the economy to grow only modestly for the remainder of the year, but to pick up next year. The earlier policy easing by the Federal Reserve will help cushion the economy from some of the effects of the shocks, and the fiscal stimulus program is helping at present. Over time, the drag from housing will wane and credit conditions should improve.”