 The markets and media place huge emphasis on the actions and prognostications of the Federal Reserve and other top government regulators. The problem with this is that the Fed and Treasury are generally clueless.In December of 2006, Tim Geithner said "We think the fundamentals of the expansion going forward still look good." This was shortly before the economy peaked in 2007, then crashed and burned in 2008. At the time Geithner was President of the New York Fed. How was he punished for being completely wrong? He was promoted to Secretary of the Treasury. There were obvious signs at the time that the housing market was faltering. But, according to recently released transcripts, Fed officials laughed about the cars that builders were offering as signing bonuses, and about efforts to make empty homes look occupied. They joked about one builder who said that inventory was "rising through the roof." In general, right before the onset of the Great Recession, Fed officials thought the economy might grow too fast, spurring inflation. We understand that America has lots of stupid citizens with a poor understanding of the economy. We just wish they weren't in charge.
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