Jacob, Gottfried and threaders, the following quote is from the Bob Woodward book, MAESTRO.
MAESTRO
by
Bob Woodward
(Page 223)
“According to Greenspan, Information technology, defined the current period. Something profoundly different had
occurred. Computers and the Internet were at the root of the extraordinary productivity improvement. Computers
allowed vastly better inventory management in a way that had been unimaginable only years before. What was truly
remarkable, however, was the vast dissemination throughout society of the new technology and the speed of the
dissemination. All of this dissemination added productivity growth throughout the economy. There was little question
that further major advances lay ahead. They were truly in a capital equipment investment boom. . .
Greenspan complimented Clinton on his efforts to use budget surpluses to reduce the federal debt.
It’s a very powerful idea for the public, the president said, the idea of being debt free.”
“If the federal government were debt free, Greenspan said, that would not take away its ability to do expansive
things. Without debt, the government could eventually reborrow trillions of dollars if necessary in a crisis or an
emergency. It would be available for the right moment. The surpluses and absence of deficits would also help keep
long-term interest rates down, because the federal government would not be borrowing, and therefore, making more
money available for business borrowing.”<b/>
IMO, GS really screwed things up. The economic, "Philip Curve," philosophy on the FED who believed that we would
have inflation below 6% did not take into consideration the above as the reason for low unemployment which was
created by low interest rates and consequently increased corporate capital expenditures. With increased capital
expenditures employees could be more productive and therefore keep down inflation.
With GP's increase in rates, IMO, he caused the lowering of productivity, increased unemployment and increased
inflation. It is a vicious circle. |
