Three Laughs For Central Banking

Because Ending the Fed and repudiating the concept of state-franchised central banking would be so dangerous.

After all, where would be without its clairvoyance?

While everyone with a three digit IQ flashed on heavy weather ahead in the housing market in 2006:

Federal Reserve missed signs as crisis loomed

Transcripts of 2006 policymaker meetings illustrate a glaring absence of alarm.

Despite signs of trouble for the nation’s overheated housing market in 2006, there was plenty of banter and laughter around the big mahogany and granite table inside the Federal Reserve where top policymakers gathered one day in March.

Running his first meeting as chairman of the central bank, Ben S. Bernanke, in his collegial style, solicited observations about the economy from colleagues. Some of the Fed’s staff earlier had talked about the potential risks, but in that meeting and in subsequent ones that year, there was a glaring absence of alarm about the dangers of the housing bubble and what might lie ahead for the broader economy.

Instead, concerns about a housing bust were largely dismissed by most officials, according to meeting transcripts released Thursday.

“We believe that, absent some large, negative shock to perceptions about employment and earned income, the effects of the expected cooling in housing prices are going to be modest,” said Timothy F. Geithner, the current Treasury secretary, who then was president of the Federal Reserve Bank of New York.

When Geithner was finished, Bernanke asked, to a round of laughter, “Anything to report on co-op prices in Manhattan?”

“As in many cases, I am not sure what you can take from the anecdote, but I guess some people say that you see a little of the froth dissipating,” Geithner replied. “But I don’t think the adjustment is acute.

“If you see hiring at the New York Fed go up substantially in the market, that will be a good leading indicator of housing prices reverting somewhat,” he said, prompting more laughter.

Who sent Geithner to Treasury?  Oh yeah.

Queue a Ron Paul bump in the polls in three, two, one…

Here’s your ad:  “They laughed.  (Images of the Los Angeles Times headline banner, highlighting this article and the words ‘banter and laughter around the big mahogany and granite table’).  (Images of Bernanke and Geithner, with laughter noises in the background.)  They laughed.  (‘Concerns about a housing bust largely dismissed’ highlighted)  They laughed.  (Images of the unemployment lines, housing foreclosures, shuttered businesses)  They laughed.  (Image of Newt Gingrich, background audio of Gingrich calling Ron Paul’s call to audit the Fed ‘nutty’).  I’m Ron Paul, and I approved this message.”