Magazine article The International Economy

The Curious Case of Greenspan Bashing

Magazine article The International Economy

The Curious Case of Greenspan Bashing

Article excerpt

Maybe it's the overwhelming animosity throughout the global community towards George W. Bush's handling of the war in Iraq, but TIE remains a bit perplexed by the continued global elite sniping at Federal Reserve Chairman Alan Greenspan. The normally astute British-based financial press in particular has led the charge, and now even the non-financial press is in on the act.

First, the Chairman faced blame for supposedly single-handedly causing the U.S. stock market bubble. Now the charge is that monetary policy has remained too accommodative for too long, risking a bond market bubble. When Greenspan a number of years ago began preaching the wonders of U.S. productivity performance, his critics calmly admonished that while historically productivity growth can jump temporarily, the long-term rate is unlikely to veer from the historic norm.

While TIE has had no problem running articles critical of the Fed Chairman, it is hard to deny that in recent years his insights have proved surprisingly accurate. To begin, the Chairman's initial gushing enthusiasm over U.S. productivity performance seemed odd. Now it's clear the Chairman perhaps wasn't enthusiastic enough. Indeed, the fact that Alan Greenspan and certain of his colleagues such as Ben Bernanke several years ago recognized the possibility of this productivity story saved the world from an early preemptive recession. The American public in particular has enjoyed several years of compounded wealth in a climate of miniscule inflation as a result of the Chairman and certain colleagues following a sophisticated but nevertheless gut instinct instead of listening to the conventional wisdom of the day. …

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