Be worried: Mervyn King is relaxed about inflation

Central bankers have a poor record when it comes to predicting economic turmoil.

Why do people still pay attention to central bankers? The last decade has shown that they're as clueless as anyone else when it comes to spotting bubbles and dealing with consequent disasters. Transcripts of US Federal Reserve meetings in 2007 have just been released, and they show the US central bank's members failing to grasp the scale of the impending crisis.

As 2007 began, "the Fed was still complacently disregarding problems in the housing market", says Binyamin Applebaum in The New York Times. They could see people losing their homes and subprime lenders falling like flies, but "did not understand the implications for the broader economy".

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