Tuesday, October 9, 2007

Trial of Greenspan: guilty or not?

A recent article written by J. Bradford DeLong lists four charges against Alan Greenspan, which have been elicited by the release of his ghostwritten memoirs The Age of Turbulence.

The indictment contains four counts: that Greenspan wrongly cheered the growth of non-standard adjustable-rate mortgages, which fueled the housing bubble; that he wrongly endorsed Bush's tax cuts; that he should have reined in the stock market bubble of the 1990's; and that he should have done the same with the real estate bubble of the 2000's. According to DeLong, Greenspan now pleads guilty to the first two counts, while those "felonies" of which Greenspan stands accused are the rest two where Greenspan firmly holds his ground and pleads not guilty.

And the final words seem to be eclectic: "All in all, Greenspan served the United States and the world well through his stewardship of monetary policy, especially by what he did not do: trying to stop stock and housing speculation by halting the economy in its tracks. " Right, after all, like Milton Friedman has once pointed out, the economy is ineluctably susceptible to the specific person who takes charge of the Fed. Had someone else done any better than Greenspan?

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