The Greenspan Legacy
January 31, 2006, marks the end of a financial era. The longtime chairman of the Federal Reserve, Alan Greenspan, will retire after 18 years at the helm of the United States' central bank. Widely lionized at the pinnacle of his career, Greenspan's legacy will profoundly affect investors worldwide for many years to come.
As Greenspan's tenure as the most powerful man in the financial universe is debated among investors today and historians tomorrow, his many decisions will be dissected and evaluated. But I fear most of this debate will overlook the most foundational and crucial issue. Before Greenspan's actions are considered, the very notion of the Fed itself ought to enter the limelight.
The Federal Reserve is not a capitalistic entity compatible with free markets. Instead it functions just like the miserably failed old-school command-and-control communism model. The core philosophy of the Fed and its Federal Open Market Committee that controls short-term interest rates is that mere mortals meeting in secret like a conspiracy cabal are better suited at setting the price of money than the free markets.
( Full story here )
As Greenspan's tenure as the most powerful man in the financial universe is debated among investors today and historians tomorrow, his many decisions will be dissected and evaluated. But I fear most of this debate will overlook the most foundational and crucial issue. Before Greenspan's actions are considered, the very notion of the Fed itself ought to enter the limelight.
The Federal Reserve is not a capitalistic entity compatible with free markets. Instead it functions just like the miserably failed old-school command-and-control communism model. The core philosophy of the Fed and its Federal Open Market Committee that controls short-term interest rates is that mere mortals meeting in secret like a conspiracy cabal are better suited at setting the price of money than the free markets.
( Full story here )
posted by Oil Shock at 1:31 PM
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