Dec 12, 2007

Ken Fisher on progress in central bank management

Errors still happen - like when Greenspan created way too much money in 1999 in fear of potential Y2K problems, flaming the economy. Then, he sucked it back out in 2000 after Y2K wasn't problematic - helping make the 1999 and 2000 boom-bust bigger than otherwise. But mistakes are made less routinely and massively than in the pre-Volcker era. Greenspan's worst mistakes were pretty good compared to the best of earlier decades... My guess is, as central bankers benefit from future improved information flows and accumulated lessons of the past, on average they keep making mistakes but the mistakes are fewer and not as bad.

~ Ken Fisher, The Only Three Questions That Count (2007), p. 267

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