Greenspan: Basically a Politician

The book on Greenspan is that his genius kept inflation low and the economy humming through both Republican and Democratic administrations. Monetary policy is such a blunt instrument that it would be dificult for it to be directly attributed with either creating or undermining successful manipulation of the economy.

But if ” The Fed’s” use of moral suasion in the economy is a measure to be considered to determine economic outcomes, Greenspan will be remebered very positively. While many disliked his opaque style, few will argue he didn’t matter.

Greenspan’s hold on the business community through recent prosperous times was universal. There is little scope for argument on this fact. There certainly was a very vocal body of opinion that greatly disagreed with The Fed in general and Greenspan in particular, James Grant comes to mind, yet this was an unpersuasive minority.

Recently, critics are coming out of the woodwork, years after the fact, criticizing Greenspan’s hold on The Fed’s interest rate policy. This underwhelming command of the obvious glance into the rear view mirror is plainly pettifoggery. Parsing economic history based on revisionism motivations is best played by academics for vey low stakes.

Greenspan was a politician who won reappointment after reappointment. Winning ugly is still winning. I’ll save my defense of the avoidance of deflation in the economy for another post. But that was the fear in the post Tech-Internet Bubble, believe it or not.