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Mr. Potter- I realize that you staff guys are not the real villains here. Sorry I spewed at you. Thank you for putting my comment back. However, I also want to point out that not only did NY Fed staff get the forecast consistently wrong, so did every single FOMC member and every single district bank president. Not only did all of them get the forecasts wrong every time, they even could not accurately say where the economy was at the time they were surveyed. This, to me is evidence of ingrained delusional crowd behavior. To their credit, while they could not get the GDP or employment figures correct, they did get inflation largely correct. Congress should return the Fed to the single mandate. The idea that the Fed should additionally target GDP, is beyond laughable. It's bizzaro world stuff. But there are some who take it seriously.
The excuse that most other professional forecasters didn't foresee it is just that, an excuse. Some professional forecasters did see it. They were derided as Cassandras and dismissed by Wall Street and Fed insiders, who are only beholden to each other, and to their own delusions. Millions of amateur economic forecasters who frequented the financial message boards and blogs saw what was happening and what was coming. They had one important advantage. They live in the real world, not inside the Beltway, not within the marble halls and equally hardened thought processes of the Fed, and not in the ivory towers of academia, a word which sounds like a disease, because it is a disease. Not only do these environments cause delusional thinking, they attract delusional people. The same is true of policy makers. I call it elitist personality disorder. It leads to delusions of grandeur, delusions of omniscience and omnipotence, and the unwillingness to take responsibility for failure and incompetence, instead engaging in blame shifting.
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Apr 18, 2011