Saw this on another thread. Good questions.
bloomberg.com
Questions for Greenspan That Need Better Answers: Caroline Baum
Sept. 21 (Bloomberg) -- It's been all Greenspan, all the time for almost a week now, what with news stories trickling out last weekend, official publication of the former Federal Reserve chairman's memoir on Sept. 17, and a PR media blitz encompassing print, TV and personal appearances in various cities.
Everywhere you look, there's Alan Greenspan. He's been interviewed by Leslie Stahl on 60 minutes, Matt Lauer on the Today Show, Maria Bartiromo on CNBC, Jim Lehrer on the NewsHour, Neil Cavuto on Fox, Al Hunt on Bloomberg TV, even John Stewart on Comedy Central. He's been featured in the New York Times, the Financial Times and the Wall Street Journal.
It's getting old quickly -- almost as quickly as it's selling books. ``The Age of Turbulence'' vaulted to No. 1 on Amazon.com the day it went on sale.
Somehow I doubt Greenspan would do a sit-down with me, so I'm making my list of questions public instead in the hope that some interviewer might choose to ask one of them -- or, on the slim chance that Greenspan will decide to answer.
1. In the book, as in your speeches and testimonies as Fed chairman, you hyper-focus on the federal budget deficit. In some ways you seem more concerned about fiscal policy than in minding your own store, even admitting you would have ``loved a chance to serve as Treasury secretary.''
Did you ever think of tendering your resignation and telling the president (you were Fed chair under four) you'd like to saddle up with the administration? Maybe director of the Office of Management and Budget would have been more your cup of tea.
2. You repeatedly refer to the need to ``unlearn'' clear writing when you became Fed chairman, to couch your comments in Fedspeak. You wear it as a badge of honor that no two news organizations could agree on what you had said. Why? Did someone tell you opacity was part of the job description? Or did you make it up as you went along? Is that efficient-markets stuff just something for the textbooks?
3. No doubt some of your fellow central bankers will be surprised to learn how little weight you give their role in reducing inflation in the last five to 10 years. Instead, you say certain forces -- globalization, innovation, the fall of the Berlin Wall -- came together ``serendipitously'' to depress inflation worldwide.
If exogenous events dealt you such a fortuitous hand, why didn't you allow the price level to fall -- you know, the ``good'' kind of deflation, driven by technological innovation - -which is what would have happened under your preferred monetary anchor, the gold standard.
4. In that same vein, you write you were ``struck by how relatively easy it was to bring inflation down.'' When you assumed the Fed chairmanship in August 1987, the consumer price index was rising at an annual rate of 4.3 percent. In January 2006, the month you left, the CPI was rising 4 percent.
You inherited a core CPI, which excludes food and energy, of 4.2 percent and cut it in half. That computes to a decline of 0.1 percentage point a year. If lowering inflation was such a chip shot, why don't you have more to show for your effort?
5. When you were Fed chairman, you wondered out loud about ``irrational exuberance'' in the stock market, even though Bob Rubin, whom you call one of your ``foxhole buddies'' (the other was Larry Summers), said such comments were inappropriate for a government official.
When Leslie Stahl asked you about your personal investments, you refused to comment on the stock market. Aren't you confusing your role as a public servant and private citizen?
6. You say it's improper for a president to comment on monetary policy, yet you actively tried to influence fiscal policy. You told Leslie Stahl you were an ``economic consultant'' to Bill Clinton, that you are ``very knowledgeable about lots of different subjects.'' And no one else is?
You told Al Hunt you ``give advice because they ask me.'' Your successor, Ben Bernanke, has made a point of not offering pronouncements on fiscal policy. What part of ``no comment'' don't you understand?
7. Almost every interviewer has put you on the spot for your endorsement of George W. Bush's signature tax cut in early 2001 at a time when the outlook was for budget surpluses for the next 10 years. Given your justifiable distrust of politicians to save any surplus money in the public coffers, how could you buy into such a rosy scenario, especially with the burden of retiring baby boomers just over the horizon?
When Stahl asked you if you had succumbed to political pressure, you said, no, ``they never spoke to me about this.''
They didn't have to. An old Washington hand like you, with finely honed political instincts, surely you knew which way the wind was blowing.
8. You have been accused of stoking a housing bubble by keeping interest rates too low for too long. In a passage in the book, you say you were aware of loosening of credit standards on subprime mortgage loans but thought ``the benefits of broadened home ownership are worth the risk.''
Are you suggesting that maximum home ownership is an appropriate mandate for the Fed, along with stable prices and maximum sustainable growth?
You say next that ``protection of property rights ... requires a critical mass of owners to sustain political support.'' Should the government give away houses to ensure a critical mass of homeowners? Private property is a basic premise of the Constitution.
9. You write in the book that after you delivered your ``irrational exuberance'' speech at a December 1996 American Enterprise Institute dinner, you returned to your table and asked, ``What part of that do you think will make news?''
You seem to revel in your notoriety. How would you answer criticism that you were more interested in the cult of your own personality than in shoring up the credibility of the Fed?
10. Opining on the divisiveness in politics nowadays, you say the ideological divide between the Democratic and Republican parties has left ``a vast unintended center from which a viable, well-financed independent presidential candidate could conceivably emerge in 2008 or, if not then, in 2012.''
Candidate Greenspan, I presume? |
