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Politics : Ask Michael Burke
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To: Ilaine who wrote (35545)11/8/1998 5:48:00 AM
From: accountclosed   of 132070
 
Coby, your post is interesting. I don't really have a head on response. But it brings to mind something I usually think about re: Greenspan.

That is: Isn't there a crisis of definition of what the Fed is about here? It was originally chartered to preserve stability of the U.S. banking system. The implied charter has grown to fight inflation and deflation(preserve stable business conditions), regulate the stability of the bond market so Uncle Sam can sell its bonds, defend the value of the greenback, and on and on etc. ad infinitum. Over the last several years, slowly but surely the amount of emphasis on overseas business conditions and markets has become a greater emphasis. Afterall, they are our business partners is the justification.

So you have a Fed that needs to keep its eye on hundreds of aspects of the domestic economy, but at the same time being watchdog for economies in all corners of the world. When we bail out Continental Illinois we are at a fairly immediate level defending the banking system. When we get to LTCM, we are at a meta-level. And the same Fed that defends the dollar, jumps into to support the Yen at other times.

I am a little of a hypocrite in my own thinking because I used to opine that what Greenspan did wrong was not realize that monetary policy had to account for the new "one world" economic order. Now I just wonder "What should the Fed's job be"?

(and you accuse me of being an early bird?)
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