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Politics : Stockman Scott's Political Debate Porch

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To: Jim Willie CB who wrote (9560)	11/18/2002 8:00:31 PM
From: stockman_scott	Read Replies (3) of 89467

Greenspan Laments Limits of Policy By MARTIN CRUTSINGER AP Economics Writer 11/18/02 WASHINGTON (AP) - Federal Reserve (news - web sites) Chairman Alan Greenspan (news - web sites) said Monday that the nation's central bank has learned a lot about how to manage the economy during its 89-year history, but policy-makers will never know enough to avoid all mistakes. "History teaches us that no matter how well-intentioned economic policies and decisions may be, policy-makers never can possess enough knowledge of the complexities of the economy nor sufficiently foresee changes in the economic environment to avoid error," Greenspan said. "But history can and does provide examples that can help guide policy-makers away from repeating the worst mistakes of the past." Greenspan spoke at a book party sponsored by the American Enterprise Institute for the publication of "A History of the Federal Reserve: Volume 1, 1913-1951" by Allan H. Meltzer, a professor of economics at Carnegie Mellon University. Meltzer, a noted economist, spent 30 years researching the history of the Fed. He served on the Council of Economic Advisers during the Reagan administration and more recently chaired a federal commission that recommended sweeping changes in the operation of the International Monetary Fund (news - web sites) and World Bank (news - web sites). Greenspan said Meltzer's history included "the most exhaustive examination to date of records of policy discussions" by the Fed's board of governors and officials at the Federal Reserve Bank of New York, which in the early years after the Fed's creation played the major role in monetary policy. One of the themes in Meltzer's book is an examination of how Fed mistakes in handling the 1929 stock market crash contributed to the Great Depression of the 1930s. Greenspan said Meltzer had done an excellent job in examining "the early internal power struggles and the profoundly challenging economic and political events" of the Fed's early years. "Over the years we have become more knowledgeable about how the economic environment evolves. But to our predecessors, much was virgin policy territory," Greenspan said. "It is no wonder that many of their initiatives went astray." Greenspan noted that Meltzer had produced an early draft on the chapter covering the Great Depression in 1966 as part of a "monumental 30-year effort" to produce just his first volume of Fed history, which ends with the landmark 1951 agreement giving the Fed more independence from the U.S. Treasury. But Greenspan asked to make one request: "Could we put volume II on a faster track?" ___ On the Net: Federal Reserve: federalreserve.gov

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