Chairman Ben S. Bernanke
At the Ceremony Commemorating the Centennial of the Federal Reserve Act, Washington, D.C.
December 16, 2013
Concluding Remarks
“I have been asked to close this ceremony marking the 100th anniversary of the signing of the Federal Reserve Act–the law that created the Federal Reserve–by looking ahead to the next century. Given the well-known difficulties that economists have in forecasting even the next few quarters, I will happily point out one important advantage in making a 100-year forecast, which is that I won’t be around to explain why the forecast went wrong. Our ability to make accurate long-term forecasts is limited, to say the least. Nevertheless, I will venture one prediction that I don’t think is too bold, which is this: The values that have sustained and served the Federal Reserve at its best, and have permitted it to make critical contributions to the economic health of our nation during the past century, will continue to serve it and the nation well in the century ahead.”
I dare say it is far easier to predict the long-term compared to the day-to-day. Why? A trend in motion stays in motion until concluded. The markets will rally quickly, but then fall back to follow the trend. So forecasting the business cycle is easy – the closing price for tomorrow – far more difficult. Nonetheless, the single forecast Bernanke just made today about the long-term viability of the Fed I can say will be dead wrong. The Fed 100 years from now is unlikely to exist. Its life expectancy will be severely tested in just 12 years. Yes, you heard right.
When the next ECM Wave turns down, it is highly likely to take the Fed with it. The risk of failure of the Federal Reserve will arise 112 years after its birth in 1913 and that brings us to 2025. So yes – the Fed may fail at that time because it is incapable of doing the job as the politicians have constantly changed its focus and design.
The entire central banking system is in serious trouble. They have manipulated rates lower but fear what happens when the economic pressure forces as rise. Even the BIS was calling for a crash last September, but the share markets rallied to new highs and they remain baffled to say the least. Sorry – Dorothy. You ain’t in Kansas anymore. Not even the Yellow Brick Road can be restored.
