How Can Smart People Do Dumb Things?
Top Federal Reserve officials in 2006–recall that was the time that the housing bubble was about to burst–”laughed about cars that builders were offering as signing bonuses.” These economists and investment bankers, the best and the brightest of those responsible for understanding the basic mechanisms that drive the economy, “gave little credence to the possibility that the faltering housing market” was shoving the economy into a recession. “We just don’t see troubling signs yet of collateral damage,” then President of the Federal Reserve Bank of New York (and current U.S. Secretary of the Treasury) said, “and we are not expecting much.”
Two years later, retired Federal Reserve Chairman Alan Greenspan, who presided over a growing economy for nearly two decades, apologized to a U.S. Congressional committee that the economic models he had used were flawed.
Then there was President Bill Clinton and Monica Lewinsky. Don’t forget Enron. And surely, some of us recall those smart people falling for email scams from Nigeria promising millions of dollars for access to social security
