There is however one figure, above all, who could usefully be pilloried, one icon of the U.S. economy whose downfall would bring home a useful, indeed invaluable lesson, that state meddling with monetary policy is inevitably de-stabilizing compared with a self-regulating system such as the gold standard. Milton Friedman pointed out in 1960 that the Federal Reserve did much to cause the Great Depression, by over-inflating money in the 1920s and over-restricting it in the 1930s. This time, the inflationary mistake has been repeated. In his urge to remain popular, Fed Chairman Alan Greenspan omitted to apply the brakes at an early stage in the late '90s bubble. Instead he chose to make optimistic and largely unwarranted statements about how productivity had revolutionized the U.S. economic system, so that incessant inflation of the M3 money supply, at 10 percent per annum year after year, had no effect on the economy, and thus "irrational exuberance" in the stock market was in fact warranted. Since January 2001, Greenspan has pumped up the money supply still further, causing a needless prolongation of the unproductive early stages of the downturn.
When the revolution comes, let's spare the moderately innocent Wall Street bankers, and the somewhat less innocent politicians. Spare even the trial lawyers, the talk show hosts, and the accountants. Instead, if an example must be made, let us blame the single man most responsible for the excesses.
"Greenspan a la guillotine! A bas le Federal Reserve Board!"
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