Someone has produced a report on the Federal Open Market Committee’s laughter. The FOMC sets monetary policy for the Federal Reserve.
CNBC has picked up this story.
Back in the pre-crash days, there was a lot of playful banter. The study reveals that the members of the FOMC did not take seriously warnings that the FED’s interest policy had produced a real estate bubble.
Since it was not a bubble, it could not pop.
In what may be the strangest market indicator ever, a blogger found that the amount of laughter recorded in the official transcripts of Federal Reserve Open Market Committee meetings from 2000 to 2006 correlates almost perfectly with the rise in housing prices taking place at the time.
A particular series of side-splitting meetings by the central bank in 2006 marked the very top of the housing bubble. . . .
“Group-think dominated the FOMC meetings and Sir Alan, as we pointed out so often, was completely wrong about the potential negative effects of derivatives,” wrote Alan Newman, who nicknamed the bloggers findings “The Laughter Index” in his Crosscurrents newsletter to clients this week. “We can never know within a reasonable period of time if the FOMC actually knows what it is doing. We are not laughing.”
It will be interesting to see if the amount of laughter decreased in 2008 and later. My guess is that it did. We will have to wait for full transcripts to be released.
All talk of Federal Reserve transparency is a bad joke. An audio of the meeting should be released on the day of the meeting. That would be transparency. Anything else is secrecy with a thin veneer of public relations on top.
Here us a private committee that sets policy for the nation, and Congress is not allowed to get a full transcript for 5 years. This is democracy, as defined by the elite whose agents control the 12 Federal Reserve banks.