Don't blame Bush, don't blame Daschle. IT'S GREENSPAN'S RECESSION

nr online ^ | Nov., 01 | Kudlow

[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.

[churchillbuff]

bump

[churchillbuff]

honk if your portfolio's in the pits

[churchillbuff]

bump if you've lost your high-tech job because Alan was deternined to "pop" the high-tech and internet "bubble" Mission accomplished, Alan!

[oust the louse]

honk honk honk friggin honk!

[OldFriend]

Larry Kudlow is absolutely correct in laying the blame at Greenspan's feet. He has been pointing out the follow of G's policies for well over a year.....

The question is whether it was done due to senility or design. Either way, it's time for GREENSPAN TO GO.

[oust the louse]

it's time for this guy to go....any suggestions as a replacement people? Oh by the way,HONK HONK HONK!

[MFSanders]

You are correct about Greenie. However, the recession was delayed a couple of years. Should have and nearly did happen w@k����.ed. One reason it did not was because the Treasury started pumping extra currency into the economy. If you watched The O'Reilly Factor the other night, he had a Prof. on who has written a book recently about this entire thing. They were talking about the fact that Greenspan is ordering the shredding of a huge amount of documents. The Prof. contends that Greenspan said in one of the soon to be shredded documents that he was DELIBERATELY doing the rate reduction to burst the stock market bubble!!!! I tend to believe this. What Greenspan now fails to realize is that cutting the interest rates will only make things worse. Japan, for example, has had zero percent rates for years - and they are in a deep recession. Greenspan needs to GO!!!!!!

[oust the louse]

Whether it was by design or senility it screams of immediate replacement......

[MFSanders]

Suggestion as a replacement for Greenspan - either Milton Friedman or Thomas Sowell - possibly Eugene Fama!

[churchillbuff]

Wow, that's an incredible claim - - - shredding documents?. We don't have cable at this time so I haven't seen OReilly in months. HE was certaihly on the Greenster's case back when we were still watching. For example, one night OReilly noted that Greenspan had been spotted at some top-dollar restaurant in NYC, having an elegant dinner with society friends - - - O'Reilly said, "This guy is living large while he's dragging the economy down for the little guy."

If there's document shredding going on, should Larry Klayman be informed (And I'm not being sarcastic here - - my point is, are laws being broken?)

[churchillbuff]

During an 18 month period - or maybe even shorter - Greenspan hiked interest rates something like six times (if somebody knows the figures better, please correct me). Anyway, it was an unprecedented series of hikes - and the recession followed. He had even said time and again that he didn't like the stock market being so high - - Even though there wasn't CPI inflation to speak of , he was viewing the stock market as an inflation signal (over the protests of many economists) and he was determined to bring it down. DON'T TELL ME HE'S NOT RESPONSIBLE FOR ACCOMPLISHING WHAT HE SET OUT TO ACCOMPLISH

[SmartBlonde]

Unusual to find someone who understands economic issues AND explain them with clarity. Kudlow has been warning about Greenspan in spite of the worship-at-his-feet attitude of so many; maybe people are finally beginning to listen.

[churchillbuff]

Kudlow's kewl. Greenspan's a grinch

[LantzALot]

Ho-o-o-o-o-nk!!!!

The variable portion of my pension, which had only gone down one quarter in its 40-plus year history (even through market downturns) has now dropped nearly every quarter for more than a year.No matter. I'm still increasing my monthly contribution to FR.

beep-beep!

[UnBlinkingEye]

bump if you've lost your high-tech job because Alan was deternined to "pop" the high-tech and internet "bubble" Mission accomplished, Alan!

BUMP...

[mcurb]

you must have your medication adjusted.

[mr.pink]

Greenspan deserves a public egging. He's a first class prima donna who's up front and center whenever it's time to take bows for economic surges, stiking poses of the it's me and only me, aren't I the greatest thing since sliced bread shameless sort.

But when things get ugly, the first class nancy runs and hides and lets congress and the pres take the blame as if he's some sort of helpless bystander whose slimey fingerprints have evaporated from the economic crime scene.

On a side note.... years ago I ran into Greenspan at a semi-grubby neighborhood market (not the place you'd expect him to be....but it was close to the FED in downtown NYC)... he was buying a quart of skim milk. S.S. boys in long coats were at the ready, and with myself sporting a three day beard to go along with very red eyes from a night of hard drinking, his posse kept their eagle eyes on me and my dozen eggs.