Tony,
I don't think you can fault Mr. Greenspan for pumping liquidity into the economy before Y2K. Remember, there were reports of people hoarding cash, emptying ATM machines. That stuff didn't turn out to be true, but if it had, there could have been some serious problems. If you put yourself in his shoes, you would have probably done the same thing.
Did the FOMC overtighten, I think yes. Mr. G., from the FOMC meeting notes on the last change, was against the 1/2 point move up. I think their hands were tied at this last meeting, they need the confidence of the investment community, and couldn't make the jump they needed to make from inflation fear to cutting rates. As hard as it sounds, sometimes, we need these guys to be gradualist, not jumping all over the place.
Hopefully, there won't be too much pain before they get around to cutting rates, at or before the next meeting.
John |
