Until the economy is ready to turn, *every* easing is a waste of psychological ammo IMO. The Fed should permit the markets to operate freely, purge the excesses, and then step in when things get out of hand and the positive feedback in the system is latching, in either direction. This holds true for taming booms as well as encouraging the economy to step out of recession. Greenboink has no business continuing to encourage consumption when our trade deficit is where it is, when the financial markets are operating as inefficiently as they are, and when it is so obvious how sick things are. Every additional transaction that takes place at the ridiculous asset prices in place heaps more good money after bad. Greenspan screwed up for the last decade, and now we all must pay the price. The longer we postpone it, the heavier the price we must pay. Giving away another trillion dollars to JP Morgan Chase et al. doesn't help the rest of us out in the real economy.
I agree, however, that it is the only thing he feels he can do. History would be ruthless in treating him otherwise. However, History will not be kind to Greenspan regardless.
Unfortunately, the pain falls disproportionately on those with the least guilt.
BC |
