In January 2008, Federal Reserve Chairman Ben Bernanke made this memorable announcement: “The Federal Reserve is not currently forecasting a recession.”
This was a poor forecast indeed, since as we now know, a very deep recession had already started by the time of the Fed’s prediction that there wouldn’t be one. This is only one of many such errors. If you have the unrealistic belief the Fed should somehow manage the economy, the financial system, inflation, employment, interest rates, financial stability and risk, you run into a granite wall of a knowledge problem. The Fed does not know and cannot know enough to do all this.