"I think the Fed has done an extraordinary job and it's done a huge amount (to bolster employment). There's just so much monetary policy and the central bank can do. And I think they've gone to their limits, at this particular stage," said Greenspan on "Meet the Press."
Who let this guy go on television? He must hate America, or at least Obama. Just as we are heading into Christmas, you go on national television saying that there is nothing more that could be done by the Fed, essentially saying that Bernake and Co. are doing it wrong and that they need to reverse their current policy. Greenspan, you are no longer Fed chairman, remember that.
Thought he may have a point- the Fed has done just about everything in its power to try and turn the economy around and, well, you see how things are. I particularly agree with Greenspan on this point:
“…loan demand has been very dull because businesses are very heavily liquidating inventories. That's coming to a halt and when that happens loan demand will come back and the pressures on short-term interest rate will begin to grow.”
That’s a good point- we probably have another two months until businesses start moving to create new inventory- I mean, one way or another they have to move the Christmas and New Year’s stuff, and ideally they will want other things to sell- hence need loans to make those things happen. And, as Greenspan says, we will need to up the interest rates on those loans a bit, even 1% would be better than where it’s at right now.
Congress is snipping away at the Fed’s power, with a recent bill in the House passing (we’ll see something about that in the senate like 6 months from now) that designates a federal watchdog to audit the Fed when necessary.
"What you will be getting is a monetary policy more dedicated to political short-term considerations, not to the longer-term considerations which the Federal Reserve Act is specifically constructed to do," Greenspan said- Perhaps, but the entire push for financial reform is that there is a sense that the government and the Fed could have done more to stop the severity of the current recession- to which I would say, probably not, you know?
Sure, we are all pointing fingers and looking for someone to blame around the recession- it’s easier and it makes you feel better to wish that the overseer government or Fed could have stopped this from happening. We certainly don’t want to address the reality that greed- both of the lenders who wanted commissions and from people who wanted homes- is what drove all of the lending and ultimately spun the wheels of chance that landed here, calling everyone’s bluff at once, and casting us all out to sea on the shreds of the American Dream, only now echoing with calls that people are… Fed up. But Greenspan, leave it alone. Don’t spout off on Meet the Press about what you think Bernake should do- that’s not helping anyone.
Photo Credit: trackrecord (via Flickr under CCL)