>>Greenspan wasn't the one who created the theory that communications and computing technology was increasing productivity by leaps and bounds.<<
ok, who was responsible for implementing the new measure? shouldn't prior years have been run through the new formula for apples to apples comparisons.
before we even address those issues, though, would someone please explain where all this productivity is hiding? the bottom line is that computers hurt as much as helped. they increased competition and drove down revenues (reduced economic productivity) almost as much as they increased output. greenspin, et al, looked at one side of the equation and boosted gdp, arbitrarily, up 100%. i think the buck stops with greenspin, though i'm open to other interpretations.
>>We could go back to strict monetary conservatism and restrict capital markets to prevent all speculation but that would cause the patient to die.<<
i believe there is a happy tradeoff and i believe greenspin wrecklessly left that happy point a while back. i put forth the biggest bubble in the history of the world, the biggest credit bubble in the history of the world and biggest misallocation of resources in the history of the world as evidence of this.
>>I think that the FED needs to keep capital markets liquid but within a level that does not overly stimulate excessive speculation<<
we agree here. greenspins famous line was "you can't know you're in a bubble until it is over." what a cop out, imho.
when stock prices become absurdly disconnected from the business then you have a bubble or a depression. do you know a depression when you are in one? what a stupid question. just as stupid as greenspin's statement.
sure, there is some guesswork. the impact of the net was an open book to me - more consumer information meant lower margins. excessive hype meant excess surplus of online supply. basic economics that most folks s/h known.
i mentioned in mid 2000 to an engineer the market was waaaaaay overvalued. his response? "technology isn't going anywhere." neither did raadio, but rca still fell 95%. his response was irrational. talk about earnings and people said, "the stock goes up, i get lots of earnings. what are you talking about?" these were standard responses b/c valuations couldn't be justified - nobody even tried.
greenspin didn't "see" the bubble when a rank amateur like me saw it with 20/20 vision - all the way up and only part way down? now that is SCARY, if true.
>>What I am saying is that Greenspan is too easy a target and is not the real problem. If there had been another FED chairman in his place over the last several years I doubt the economy would look much different. Other major macro economic events have fueled worldwide economic expansion, and subsequent needs for capital expansion that override domestic policy to a large extent. No FED chairman would have stood in the way of "progress".<<
while true, we disagree on the magnitude. if the gdp calculation wasn't artificially manipulated then the talk of a "new economy" may not have taken place. remember, that was the foundation of the hysteria - the new economy. if greenspan didn't jam the system with oftentimes double digit money supply growth then folks wouldn't have aas much rope to hang themselves.
sure, others screwed up in similar ways. the asian excesses hit home in 1998.
i think the lust of something for nothing is too strong for these clowns to resist. problem is, tanstaaafl.
time to pay the piper. |
