Posted on 12/15/2001 7:10:53 AM PST by churchillbuff
ALAN IS LOWERING INTEREST RATES LIKE THERE'S NO TOMORROW - - - I THEREFORE ASK, WHY DID HE HAVE TO RAISE INTEREST RATES SO HIGH TO BEGIN WITH- ISN'T THAT WHY WE'RE IN THE FIX WE'RE IN, with stocks 30 percent or more below the beginning of 2000? Thanks, Alan.
Here's Kudlow's take:
A Roadmap for Recovery
This is Greenspan's recession. Here’s what to do.
Mr. Kudlow is CEO of Kudlow & Co. November 1 , 2001 12:45 p.m.
Make no mistake about it, the 0.4% decline in third-quarter gross domestic product had virtually nothing to do with the September 11 terrorist bombings and virtually everything to do with massive monetary mistakes made by the Federal Reserve over the past two years.
Blame for this downturn must be placed squarely at the doorstep of the central bank. President Bush is right to say that the terrorist attacks "affected our workforce and our business base," and the economic aftershock of 9/11 would by itself have caused a temporary fourth-quarter contraction of about 1% of GDP. But the third-quarter drop — which probably will be backdated to a recession that began last winter — could have been avoided were it not for massive monetary mistakes.
In the first place, nobody told the Federal Reserve to ratchet up its basic money supply by 17% in 1999, and then deflate it by 3% in 2000. This was a pillar-to-post policy gyration and it was sheer lunacy. A massive money excess followed by a huge money shortage caused national income to careen upward unsustainably and then spiral downward later. This was the root cause of the recession.
The Fed chairman's reputation was supposedly that of a cautious incrementalist. Instead, Alan Greenspan gave us unprecedented monetary volatility. No wonder the economy spun out of control. .....Well, the recession-creators have in fact pumped $40 billion of new cash into the economy since the 9/11 terrorist bombings. Year-to-date, the Fed's basic money supply has now grown by 8.5%, a considerable improvement from last year's 3% decline rate. These are moves in the right direction. And if tax policy falls in line, we may soon bury this private-sector recession. But that's if it falls in line.
It is important to understand that at the very heart of this slump is the downturn in business. While class warriors on Capitol Hill attempt to block greatly needed business- and personal-tax relief, the contracting corporate sector is now forcing job layoffs faster than politicians can increase unemployment compensation. ....
Senator Daschle's stimulus proposal, however, is nothing more than an ineffectual, government-entitlement spending bill — not a tax cut — that would merely redistribute income. The Democratic package has no incentive effect that would raise after-tax economic rewards for innovation, investment, and work effort. Hence it could actually block economic growth rather than spur it. ...
A modest combination of tax cuts and central-bank money creation should provide sufficient new investment and work incentives — and the liquidity to finance them — to get economic growth back on a 3% recovery path next year. But again, these would be moves in the right direction, and not the solution. Remember, a normal recovery rate historically runs in the 5% range. This is why comprehensive tax reform and simplification should remain on the policy front burner, and why the Federal Reserve must develop a monetary reform plan that will place real-time financial and commodity-price indicators at the center of its money-creating operations.
Do you also believe that the Federal Reserve is a Government agency? Greenspan and the Federal Reserve have everything to do with the Economy. Clinton or Bush have nothing to do with it. Check out this website if you have an open mind and see what you think:
THERE WAS NO RUNAWAY INFLATION. Greenspan was fighting a nonexistent foe - - - but he WAS trying to tank the stock market, and he succeeded.
You also suggest that an unprecedented series of interest rate hikes in a short period didn't slow the economy. Buddy, even Greenspan has to disagree with you - - or he wouldn't be LOWERING interest rates frantically right now. It's an admission that he blew it by raising them so far and so fast.
So according to your "analysis", what is the remedy to the recession. Raise taxes? Also, if we don't raise taxes, will this be a permanent recession?
Like his father - Bush has put the economy in a death spiral and there's nothing Greenspan can do about it.
Even my most leftist friends giggled when Klintoon won in '92, based on what his spinners called a recession -- admitting that it was Greenspan's policies, not Bush Sr.'s that caused the hit at that time. Some of us even think that the deal was in: that Greenie's term was up in the year after that election, and Klit-on promised to reappoint him for another.
If we are going to fix the economy - we need to do what Clinton did and stop spending more money than we have.
The klit did not stop spending. The public sentiment was obviously against him by '94, and the other party got control of Congress -- the spending branch of government. Ol' slick had to pretend he was being fiscally responsible just to get reelected in '96.
You surely remember the multiple flipflop he did on the Welfare Reform bill that year: vetoed the bills passed by Congress several times; finally signed it just before the convention, claiming that it was HE who was controlling welfare; and then standing up in the DemiRAT convention calling the bill a mistake, and promising he would reverse it if we would only reelect him.
Didn't keep THAT promise, either, did he?
He was right about one thing: When he said, "It's the economy, Stupid, he was able to snow everyone who answers to the name, "Stupid." Some of them are still around.
This recession is clearly at Clintons feet, not Greenspan and most certainly not Bush.
The fake stock market surge was the result of easy money being available to virtually anyone that came up with any sort of crazy idea. The only requirement was that you needed to end your corporate name with a .COM.
We did not see a lot of red flags because everyone was increasing their so called paper net worth and everyone was working. Ponzi skemes can look good for a while.
Remember irrational exhuburance?
I think O'Reilly had the best observance on why Greenspan did what he did. Apparently too many semi and near retirement people were becoming financially independent. That spells disaster for Democraps looking to impose their socialistic utopia! So Greenspan raises rates, whacks the .com's, wipes out everyones 401k, and guess whos waiting in the wings with his Big Brother solution? Tom Dasshole! Yep old Alan took this out of his best friends playbook, Al Gore!
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