> [...] but an absence of recessions would imply perfect market participants.
No, not at all. What makes you think so? Israel (and to a lesser extent Australia) managed to skip the Great Recession on account of having competent central banks. But they didn't have any more 'perfect' market participants than any other economy.
Russia, of all places, also shows right now what a competent central bank can do for your economy---the real situation is absolutely awful on account of the 'special military operation' and the sanctions both financial and kinetic. See https://en.wikipedia.org/wiki/Elvira_Nabiullina for the woman at the helm.
See also how after the Brexit referendum the Bank of England wisely let the Pound exchange rate take the hit---instead of tanking the real economy trying to defend the exchange rate.
> They can soften or delay recessions by socializing mistakes and redistributing wealth using interest rates, [...]
Btw, not all central banks even use interest rates for their policies.
You are right that the central banks are sometimes involved in bail outs, but just as often it's the treasury and other more 'fiscal' parts of the government. I don't like 'Too big to fail' either. Keeping total nominal spending on a stable path would help ease the temptation to bail out.
No, not at all. What makes you think so? Israel (and to a lesser extent Australia) managed to skip the Great Recession on account of having competent central banks. But they didn't have any more 'perfect' market participants than any other economy.
Russia, of all places, also shows right now what a competent central bank can do for your economy---the real situation is absolutely awful on account of the 'special military operation' and the sanctions both financial and kinetic. See https://en.wikipedia.org/wiki/Elvira_Nabiullina for the woman at the helm.
See also how after the Brexit referendum the Bank of England wisely let the Pound exchange rate take the hit---instead of tanking the real economy trying to defend the exchange rate.
> They can soften or delay recessions by socializing mistakes and redistributing wealth using interest rates, [...]
Btw, not all central banks even use interest rates for their policies.
You are right that the central banks are sometimes involved in bail outs, but just as often it's the treasury and other more 'fiscal' parts of the government. I don't like 'Too big to fail' either. Keeping total nominal spending on a stable path would help ease the temptation to bail out.