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spyguy

Neel Kashkari, bank regulation and all that.

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(Could only read the BBC link.)

Quote

We've looked at the history of financial crises - this is like trying to predict earthquakes or hurricanes, they don't happen very often.

But surely central banks / governments really do have a huge bunch of metrics/KPIs at their disposal (such as identifying credit bubbles, unhealthy house price to salary ratios, or wage inflation detaching from inflation, trade deficits, business P/E ratios, margin debt, velocity of money, etc) to tell them when things are going seriously wrong. The problem is surely the political unwillingness to correct or 'pre-correct' and limit individuals and corporations' activities to exploit and extract from the real economy.

The whole 'macroprudential policy' thing sounds familiar and what we would expect of a modern central/reserve banker trying to pre-suppress unhealthy deregulation from the 'president elect', but isn't that mainly correcting bank balance sheets? If so that's reducing the impact of crises, rather than reducing the probability of a financial crisis by improving the health of the real economy.

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7 hours ago, The Young and the Nestless said:

(Could only read the BBC link.)

But surely central banks / governments really do have a huge bunch of metrics/KPIs at their disposal (such as identifying credit bubbles, unhealthy house price to salary ratios, or wage inflation detaching from inflation, trade deficits, business P/E ratios, margin debt, velocity of money, etc) to tell them when things are going seriously wrong. The problem is surely the political unwillingness to correct or 'pre-correct' and limit individuals and corporations' activities to exploit and extract from the real economy.

The whole 'macroprudential policy' thing sounds familiar and what we would expect of a modern central/reserve banker trying to pre-suppress unhealthy deregulation from the 'president elect', but isn't that mainly correcting bank balance sheets? If so that's reducing the impact of crises, rather than reducing the probability of a financial crisis by improving the health of the real economy.

Central banks?

They really are not that good. Surely people have cottoned onto that?

They have a collection of overly simplistic, naive models.

They ignore debt, whic is insane, miscount inflation.

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