Monday, January 21, 2008

Blaming Alan Greenspan
Mike Rappaport

The eminent monetarist economist Anna Schwartz blames Alan Greenspan for much of the trouble we are in:

According to Schwartz the original sin of the Bernanke-Greenspan Fed was to hold rates at 1 per cent from 2003 to June 2004, long after the dotcom bubble was over. "It is clear that monetary policy was too accommodative. Rates of 1 per cent were bound to encourage all kinds of risky behaviour," says Schwartz.

She is scornful of Greenspan's campaign to clear his name by blaming the bubble on an Asian saving glut, which purportedly created stimulus beyond the control of the Fed by driving down global bond rates. "This attempt to exculpate himself is not convincing. The Fed failed to confront something that was evident. It can't be blamed on global events," she says.

Presumably, it is Greenspan also who gets the blame for awful value of the dollar.

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Mike Rappaport


Bubba's bubble burst in 2000. Farewell dotcoms. Bush's bubble burst in 2007. Farewell subprimes. Those oafs-in-office, though, only mark the passing of time - if fault ye seek, go back to FDR, or LBJ & Nixon. Or, more recently, as you say, Mr Magoo. Still, it's a democracy of sorts, so finally one must blame The People. Mustn't one?

Posted by: dearieme | Jan 22, 2008 5:08:35 AM

Great comment, dearieme, on a rare spot-on financial understanding.
As Sophie the Greek put it, the keenest sorrow is to recognize ourselves as the sole cause of all our adversities.
I predict that won't happen.
Tocqueville predicted this state. He said enlightened thinkers had no word presently to describe what was going to happen--the only case where he had no word to describe a thing-- but by saying what it was not, he gave us some understanding of what it would be. That was a democratic tyranny.

Posted by: james wilson | Jan 24, 2008 8:30:17 AM