The bizarre statement by current Fed Chairman Janet Yellen is inciting feelings of nostalgia in me to remember the days of her predecessors. Since I started writing Generational Dynamics analyses in 2003, there have been two prior Fed chairmen, Alan Greenspan and Ben Bernanke. Let's start with Greenspan. Another reason why I consider mainstream economists, or at least mainstream economics journalists and analysts, to be airheads is because of how they covered the Alan Greenspan years at the Fed. Throughout the early 2000s, they would make a "Greenspeak" or "Fed speak" joke that when Greenspan gave a speech or statement he could not be understood because he used convoluted language. So the so-called economics experts would say that they simply couldn't understand what Greenspan was saying. That whole excuse was totally ridiculous. I didn't understand what he was saying all the time either, but then I would go to the Federal Reserve web site and read the transcript of his speech. After reading it three or four times, even the convoluted language made sense. So I formed the opinion that any economics journalist or economist who said that he couldn't understand Greenspan because of convoluted language was an airhead, and there were a lot of people like that.
So I was carefully following Greenspan during 2003, 2004, and 2005 to see what he thought of the growing stock market and housing bubbles. All my articles are on my web site, but to summarize: Early in 2004, he said there were no bubbles. In August 2004, he said that there was a housing bubble, but that it was a good thing, because homeowners could mortgage their homes, borrowing money on their homes, and have extra money to spend. In November 2004, he had a front-page interview with the Wall Street Journal admitting that he had known since 1996 that there was a stock market bubble, but decided to ignore it, and deal with it when it began to grow. Early in 2005, he completely reversed himself, and repudiated his earlier reasoning, saying that the bubble was growing. By the end of 2005, and his tenure as Fed president, Greenspan was saying that high asset prices were becoming very dangerous, and that " history has not dealt kindly with the aftermath of protracted periods of low risk premiums."
You'd think it would be big news when Greenspan repudiated his own reasoning early in 2005, but there was not a word in the mainstream media, apparently because the airheads at the Wall Street Journal and CNBC were too dumb to understand his "convoluted language."
The other amazing thing is that Greenspan himself is apparently too embarrassed to admit that he predicted the housing bubble. He clearly discussed it in his speeches in 2005-5, but never referred to those speeches later. Apparently he was afraid that if he admitted that he knew what was going on, then he'd be blamed for it.
To me, Greenspan's story is one of the most amazing of the 2000s decade....