The wonkosphere is very excited about today's release of Federal Reserve Open Market Committee transcripts from 2007, but while I'll be reading them with interest I think it's important to keep in mind that all the juicy stuff is going to be in next year's release.
The FOMC closed out 2007 with a December interest rate cut in response to housing-driven economic weakness. And we know already that all through the first half of 2008 the American economy was going through a period of moderate economic weakness. A decline in residential investment was largely, though not entirely, offset by an increase in net exports and households were feeling the pinch of high global commodity prices. This was not the best of times, economically, and but it was hardly a disaster. Better policy in 2007 might have made life in March of 2008 better, but conditions in March of 2008 weren't so bad. The problems all came later, when the Fed seems to have paid too much attention to the noise of high global commodity prices and too little to the signal of weak nominal domestic demand.
I'd love to read those transcripts.
But even though the scan of the 2007 transcripts I've already done has some fun moments—a discussion of Greg Ip's reporting techniques in the October meeting, Charles Plosser warning of unintended inflationary consequences of Fed policy in the December meeting—I don't think we'll find anything revelatory here simply because 2007 was basically the year when the Fed got things right. It's 2008 and 2009 where problems arose and the public needs to know who said what and when and why.
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