Certainty

In testimony before congress this week Bernanke said that “the outlook for the economy is unusually uncertain.” The Fed is finally admitting that they don’t know what is going to happen next and that it is going to have to take actions with this lack of foreknowledge taken into account.

I’ve been unsure of what would happen next ever since they rolled up Bear Stearns. Were previous statements of certainty mere shows of decisiveness to calm the markets, or where the people at the Fed really operating under the assumption that they new where this thing was going? I’m all for the projection of calm and strength in a crisis, but the hubris implied by the latter possibility is unsettling. Granted, humility and central banking don’t go hand in hand, but realism and central banking do. The need to ooze confidence may have cost a certain amount of pragmatism and honest assessment on the part of the people driving the bus. Our twelve foot tall vehicle may have gotten wedged under an eleven and a half foot tall  bridge.