The Telegraph ^ | 8/30/2012 | Jeremy Warner
Central bankers may have averted outright disaster, but they are powerless to do more.
Few jamborees excite financial markets as much as the symposium of international central bankers which is held annually in late August at Jackson Hole in the Rockies.
Interest this year focuses around whether, with the American recovery again running out of steam, the US Federal Reserve is about to signal a further round of quantitative easing, marking the third such burst of money-printing in that country since the crisis began.
Yet it is also fair to say that the gathering no longer holds quite the same cachet it used to. Faith in central banks as guarantors of macro-economic stability has been shaken to breaking point by the events of recent years, a crisis which they utterly failed to see coming, still less were able to prevent.
The symposium has been further devalued by the fact that many of the top European central bankers, including Mario Draghi, president of the European Central Bank, are still so busy fire-fighting that they have failed to show up.
If nothing else, the event serves to highlight that five years after the crisis began, monetary policy is still struggling to deliver meaningful solutions. Here in the UK, the Government has put its faith in a combination of “fiscal conservatism and monetary activism” to lift the economy out of its funk. In the event, government spending has hardly been checked at all, while monetary activism has failed to revive the economy as hoped. Output remains firmly stuck a full 4.3 per cent below its pre-crisis peak.
Central banks stand widely accused of having failed. Is this fair? Not entirely. Just as they were much too highly rated before the crisis hit, they have now become somewhat oversold. Part
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