The View From 1776

Belated Understanding

Former Fed chairman Greenspan seems finally to have grasped the historically demonstrable truth that an over-expanded economy will rebound more swiftly and on sounder footing when the government stays out of the picture.

Alan Greenspan’s tenure as chairman of the Federal Reserve was marked repeatedly, after the 1987 stock market crash, by his flooding the financial system with fiat money to offset declines in the stock market.  Famously he chastised excessive financial market exuberance, while, in effect, pouring gasoline on a raging financial fire.

That is exactly the monetary policy, in spades, that current Fed chairman Ben Bernanke is pursuing.  Coupling it with an excessive and misdirected barrel of congressional pork, the so-called stimulus program, has dug a deeper hole for the economy to climb out of and has made economic recovery unnecessarily difficult.

A Wall Street Journal article in the September 15, 2010, edition reports:

The former head of the Federal Reserve said fiscal stimulus efforts have fallen far short of expectations, and the government now needs to get out of the way and allow businesses and markets to power the recovery.