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.
Have you read the Enron stories in houstonchronicle.com?
Who is going to pay more for jeans or a skillet? You? That doesn't fit into my understanding of frugal living.
In fact if Clinton would have waged his "War on Terrorism" instead of bombing asprin factories, 9/11 would'nt have happened.
It's because goods and services in this country are way over priced, and the majority of Americans are uneducated and highly incompetent!!!
I remember this phrase from an article I read a few years ago in Spotlight, but not sure of it's theory.
You have more expertise than you think.
Our current national economic woes should be proudly proclaimed the "Bill Clinton Recession"
If so, why is every statistic he quotes in support of his view inaccurate. For example, he claims 17% increase in "basic money supply" in 99, 3% drop in 2000, 8.5% rise in 2001. These statistics do not reflect M1, M2, or M3.
While M1 did go down 3% in 2000 (the only verifiable figure he uses as the basis for his position), M3 went up about 10% in all three years in question.
Puppet or Puppet Master?
February 1, 2001 Alan Greenspan's about-face on interest rates and tax cuts might have you wondering if he is simply reacting to his new Commander-in-Chief, or if he is seeing how much he can manipulate the economy. Under Clinton, he was an outspoken opponent of tax cuts—which was what Clinton wanted him to be—and the architect of interest rate rises. And yet, in the last 30 days he has reversed his position on tax cuts and slashed a large chunk from the interest rate increases he had instituted.
Both changes coincided with the change of Administrations and the end of the economic growth that he had been “worried about” for some time. Along with Clinton, he opposed tax cuts; along with Bush he endorses them. Some analysts have suggested that he changed direction to curry favor President Bush, but as economist Richard Salsman noted, Greenspan's “policy at the Fed has caused a near recession.”1 In changing policies, he may only be trying to stave off the death of the economy and his reputation. One is tempted to ask, “Is Greenspan the Puppet Master, changing his policies to control the economy, or is he the puppet, dancing on the strings of political expediency?”
In fact, this is a false alternative. Both puppet and master are dependent on each other. Greenspan has revealed himself as a “second-hander;” a man not of principles but of power—one who chooses his actions according to others, either those who might control him or those that he might control. This is the deeper explanation for his actions. He is not the brilliant economic strategist who can identify the right policy for the right time. Rather, he is a cipher whose sole concerns are appeasing those he cannot control. This is a dangerous man to have controlling our economic future. 1 “Richard Salsman Interview, The Andrew Lewis Show, 1/28/01
All very sensible observations to moi ...
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