Federal Reserve Bank of San Francisco Confirms Obvious

I admit, this is from August, I too am behind on this.  But are these guys serious?  I encourage you to read the entire brochure so you can see why we pay so much for these guys.  Granted they are just San Fran, just one of the 11 meaningless regional banks that are supposed to give the false impression that the NY FED shares authority.

One of my favorite lines in the brochure is, "A housing market recovery cannot occur without an increase in sales."  First, is that really why you went to 10 years of school and learned complex stochastic calculus and leach on taxpaying citizens so you can tell us what the kid selling lemonade on the corner understands.  Unfortunately, these people don't even understand why they only right by accident, because they hold the belief that consumption is always the answer.  They fail to acknowledge the correct event needed to take place in order for recovery to follow.  For recoveries to take hold after artificial asset bubbles (see Austrian Business/Trade Cycle Theory for the cause of these bubbles) the readjustment must be allowed to take place.  Unfortunately, since people are wisely not buying and instead saving, the FED and the Government have taken it upon themselves to make sure the full adjustment does not take place.  This is a topic covered at great length, so do a quick Google search if you want to hear the reasons why this will only lengthen the time we wait for recovery.  

The point I wanted to make here is simply, no one needs it explained to them that in order to sell things we need sales to increase.  But thanks, I would like to be able to chalk it up to lack of sleep since someone has to be manning the printing press 24 hours a day.  Here is a link to another pamphlet or brochure , whatever it is supposed to be.  Long story short, the numbers are ugly, super-ugly.  

The FED is filled with guys who are good enough at math to develop any significant theory or contribution, not good enough to be trusted with real responsibility, however. They misuse physics that work well when applied to the physical world in controlled experiments,  but they are far too arrogant to understand that physics and neat integrations do nothing to explain human action and the market.  Anyone can develop endless confusing and complicated (dare I say irrelevant and useless?) equations that go on for over 100 pages and are summarized in 1 paragraph at the end,  but just because no one understood anything that was developed does not mean anything other than no one understood what was done and time was completely wasted, for what is the use of a language that can only be used to communicate with oneself.  Before getting on the high horse of it being the few who understand who are able to exploit these mathematically found opportunities and relationships, you would have to participate in a free market, which we don't expect of you, real risk may be too much of a shock.   

But its not fair to expect these guys to actually earn their money by contributing something of value that will be a benefit to consumers and living standards of society as a whole, is it?  It certainly would be asking a lot of these Doctorate educated types to understand how to do anything besides draw graphs of events that have already occurred and fit models that predict the past.

I heard Hans-Hermann Hoppe talk at the Mises Institute this summer on a podcast, and he said it pretty well.  I will summarize, but essentially he equated the current economics profession as a huge welfare program for economists.  They are paid to prove the obvious such as "water flows down" and in the more ridiculous case the impossible "that it flows up."

Oh, I may have forgot to mention, California and that whole district 12 is in some serious trouble and they are doing nothing but compounding problems.  Good work guys.