As Bob Murphy and I discussed on the Human Action Podcast, economists and financial news media are already declaring macroeconomic victory by claiming that the Federal Reserve has achieved a “soft landing,” meaning that they have raised interest rates just enough to quell price inflation without causing a crisis or recession. Even Fed Chair Jerome Powell has backed off from his previous recession forecast.
To see whether such announcements from the Fed or financial news headlines could be trusted, I searched “soft landing” and constrained the dates to 2007. This is what I found:
These same headlines could appear today and nobody would notice. It shows a profession that is still obsessed with aggregates and “expert” opinion, unable to look under the hood or consider the unintended consequences of credit expansion, which are cumulative and inevitable. No amount of sophisticated “data-driven” tinkering with interest rates can forestall a recession indefinitely.
