On Sep 25, 2007, at 10:40 PM, Wendy wrote:
Gene,
Does Greenspan give any explanation as to what happened during the
Carter
administration? I have yet to see a good explanation that would
cause the
sudden double-digit inflation and excessive hike in the prime.
"Jimmy Carter had no use for me--we met on only a couple of occasions
and never hit it off. (Of course, I'd been part of the Ford
administration and he'd defeated Ford.) . . . .
"The economy did not work in Carter's favor . . . .
"It's not that Carter didn't try. His administration proposed no
fewer than seven economic programs. But none was strong enough to
contain what was fast becoming a crisis. . . Carter felt compelled to
be all things to all people. So he'd propose new social programs
while simultaneously trying to reduce the deficit, lower
unemployment, and cut inflation . . . .
"The Federal Reserve--by law independent of the White House--only
seemed to mirror Carter's indecisiveness. My old mentor Arthur Burns
and his successor, Bill Miller, kept trying to find a middle ground
on monetary policy that would accommodate conflicting economic
needs. . . . From what I could see, that middle ground they were
looking for didn't exist.
"But I was in the minority."
There are several pages on that period. Greenspan notes that
inflation must be dealt with as a primary economic issue; if it is
not, then it can get out of control, as it did then.
Throughout the book he makes it apparent that there are often
conflicts between what economists advise is best for the economy and
what presidents do for political reasons. He is very high on Clinton
because Clinton listened very carefully to economic advice and did
what was often politically difficult but was best for the nation.
Another condition I was not aware of is how fast the economy can
change, either in acceleration or deceleration. If people get the
idea that things are bad then they stop buying and the economy
crumbles. It is not so much the facts as the feelings. One might say
that in this regard, feelings create facts.
_______________________________________________
Homestead list and subscription:
http://lists.ibiblio.org/mailman/listinfo/homestead
Change your homestead list member options:
http://lists.ibiblio.org/mailman/options/homestead/crazygardens%40verizon.net
View the archives at:
https://lists.ibiblio.org/sympa/arc/homestead
Archive powered by MHonArc 2.6.24.