{"id":22048,"date":"2017-06-30T10:26:30","date_gmt":"2017-06-30T17:26:30","guid":{"rendered":"https:\/\/goldco.com\/?p=22048"},"modified":"2025-12-10T07:12:51","modified_gmt":"2025-12-10T15:12:51","slug":"janet-yellen-and-the-hubris-of-central-bankers","status":"publish","type":"post","link":"https:\/\/goldco.com\/janet-yellen-and-the-hubris-of-central-bankers\/","title":{"rendered":"Janet Yellen and the Hubris of Central Bankers"},"content":{"rendered":"<p>Federal Reserve Chairman Janet Yellen made headlines recently for her comment that we will never see another <u><a href=\"https:\/\/www.reuters.com\/article\/us-usa-fed-yellen-idUSKBN19I2I5\" target=\"_blank\" rel=\"noopener noreferrer\">financial crisis within our lifetimes<\/a><\/u>. It\u2019s mind-numbing that someone in her position would say something like that and especially disconcerting that someone in charge of the central bank would deny the possibility of a future crisis in the coming years. Unfortunately, Yellen\u2019s statement is not that much different from previous statements by economists and central bankers who really should have known better.<\/p>\n<h2>Fed Economists Have a Poor Track Record<\/h2>\n<p>Influential economist Irving Fisher is well-known for his famous quote that stocks had reached a \u201cpermanently high plateau\u201d &#8211; this coming only <u><a href=\"http:\/\/time.com\/3207128\/stock-market-high-1929\/\" target=\"_blank\" rel=\"noopener noreferrer\">nine days before the 1929 stock market crash<\/a><\/u>. And even after the market crashed, Fisher maintained that it was only a temporary drop. In fact, stock markets didn\u2019t reach their pre-Depression levels until the early 1950s.<\/p>\n<p>Former Fed Chairman Alan Greenspan stated famously that the gold standard was no longer necessary because the Fed <u><a href=\"https:\/\/www.lewrockwell.com\/2005\/07\/ron-paul\/ron-paul-and-alan-greenspan\/\" target=\"_blank\" rel=\"noopener noreferrer\">was acting as though it were still on a gold standard<\/a><\/u>. As we know now, that wasn\u2019t true. The Fed\u2019s monetary policy led to the Dotcom bubble and later to the housing bubble. As late as 2005, Chairman Greenspan still denied that there was a housing bubble or that a housing bubble <u><a href=\"http:\/\/web.archive.org\/web\/20050611023756\/https:\/www.federalreserve.gov\/boarddocs\/testimony\/2005\/200506092\/default.htm\" target=\"_blank\" rel=\"noopener noreferrer\">would be likely to occur<\/a><\/u>.<\/p>\n<p>Chairman Bernanke made similar mistakes, <u><a href=\"https:\/\/www.federalreserve.gov\/newsevents\/speech\/bernanke20070517a.htm\" target=\"_blank\" rel=\"noopener noreferrer\">stating in 2007<\/a><\/u> that \u201cthe effect of the troubles in the subprime sector on the broader housing market will likely be limited, and we do not expect significant spillovers from the subprime market to the rest of the economy or to the financial system.\u201d Events were to prove him wrong, as everyone knows by now. The difficulty in the subprime mortgage market was just the tip of the iceberg, and we ended up in the worst financial crisis in decades.<\/p>\n<p>How can such educated, intelligent people be so wrong?<\/p>\n<h2>The Pretense of Knowledge<\/h2>\n<p>The Nobel Prize-winning economist Friedrich von Hayek called this the \u201cpretense of knowledge\u201d and addressed this in his <u><a href=\"http:\/\/www.nobelprize.org\/nobel_prizes\/economic-sciences\/laureates\/1974\/hayek-lecture.html\" target=\"_blank\" rel=\"noopener noreferrer\">Nobel acceptance speech<\/a><\/u> in 1974. Hayek argued that no single individual could ever attain the amount of knowledge necessary to plan society. Knowledge has limits that cannot be overcome: \u201cTo act on the belief that we possess the knowledge and the power which enable us to shape the processes of society entirely to our liking, knowledge which in fact we do <em>not<\/em> possess, is likely to make us do much harm.\u201d<\/p>\n<p>Yet generation after generation of economists and policymakers have failed to heed Hayek\u2019s warnings, believing in their own superior intelligence or believing that the vast and ever-increasing amounts of data at their fingertips can help them to guide the course of economic policy. The results are obvious, as Chairman after Chairman of the Fed has guided the economy into recession after recession. Rather than acknowledging the inability of bureaucrats to manage the economy, the Fed continues to double down on its misguided notions, to the point that now they even deny the possibility of another financial crisis.<\/p>\n<p>In an era of unprecedentedly loose monetary policy, that kind of attitude should give people real cause for concern. Not only is the Fed\u2019s monetary policy pushing the economy full-steam towards a cliff, now the Fed doesn\u2019t even believe that the cliff is there. If there were ever a time to buy gold and silver and protect your assets against a coming crash, now is it.<\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Federal Reserve Chairman Janet Yellen made headlines recently for her comment that we will never see another financial crisis within our lifetimes. <\/p>\n","protected":false},"author":15,"featured_media":32468,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[208],"tags":[],"class_list":["post-22048","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-federal-reserve"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v26.8 (Yoast SEO v26.8) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>Janet Yellen and the Hubris of Central Bankers &#8211; Goldco<\/title>\n<meta name=\"description\" content=\"Federal Reserve Chairman Janet Yellen made headlines recently for her comment that we will never see another financial crisis within our lifetimes. 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