Stefan Karlsson Archive
December 31, 2008 7:46 AM
by
Stefan Karlsson
There can be no doubt that Greenspan, primarily through his low interest rate policy but also through the negative effects of his various bailouts, was responsible for the housing bubble and therefore the current slump. While the Community Reinvestment Act and the activities of Fannie Mae and Freddie Mac aggravated the crisis, their role was only minor. FULL ARTICLE
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November 6, 2008 5:05 PM
by
Stefan Karlsson
Even as Greenspan is condemned and blamed for the economic crisis, not just at the Ludwig von Mises Institute but also at the Ayn Rand Institute, the "libertarian" Cato Institute now rushes to his defense (nor is this the first time Cato praises Fed policy )and argues that Greenspan pursued a "tight" (!?!) monetary policy and so can be credited with low inflation and a dampening of the business cycle.
As for low inflation, I guess that's true if you define low as lower than under Robert Mugabe or even Arthur Burns. But America's inflation rate under Greenspan was consistently higher than in almost all other major industrial countries and almost all Fed chairman's before Arthur Burns. What about dampening the business cycle? That is definitely not true, because first of all certain structural factors unrelated to monetary policy have caused business cycle fluctuations to decline and secondly, as I've pointed out before, while Greenspan's radical 2001 rate cuts probably made the 2001 recession milder than it otherwise would have been, the result of this was pnly to postpone and to further aggravate these problems. The extremely deep downturn America is facing now is a direct result of these rate cuts and as this will be a really deep slump, a and so claiming that Greenspan has "dampened" the business cycle is a bizarro world assertion.
Continue reading "The Cato Institute's Confused Defense Of Alan Greenspan" »
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June 28, 2008 3:31 AM
by
Stefan Karlsson
On LRC today I analyze the role of speculation vs. government policies in causing the high price of oil and other commodities.
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