Greener pastures span the future?
It appears that on Greenspan's last day as Fed chairman, he raised rates YET AGAIN.
Here's some of what the NYT had to say about it all...
With almost choreographed precision, Mr. Greenspan presided over his last policy meeting at the Fed shortly before the Senate voted this afternoon to confirm Ben S. Bernanke as his successor.
As expected, the Fed increased short-term interest rates today, with the benchmark federal funds rate on overnight bank loans rising another quarter point today, to 4.5 percent. This is its 14th straight increase since June 2004.
Oh, right...precision. Rates have been rising for over a year and a half straight, jobs are flying out the window, and infrastructure falls apart. I guess if Greenspan's goal was to cause a a recession that lives in the dark, he's "precisely" accomplished it. GOOD GOING!
The article goes on.
But Mr. Bernanke's freedom to imprint his own ideas on policy also comes at a moment of precarious uncertainty. For the past three years, Mr. Greenspan and other Fed policymakers had unusual clarity about the priorities: first to shore up the economy with low interest rates after 2001 and then to re-establish a more normal or "neutral" policy once the economic recovery appeared to be self-sustaining.
The priorities now are more cloudy. Interest rates are back in line with historical norms, but the economy could be on the verge of a slowdown because of high energy prices and a weak housing market.
Right. A weak housing market. WHY is it weak? Um...is it that higher interest rates make homes less affordable? Simple economics. Lower interest rates mean people can borrow more money, which means housing prices can then be higher. It's really a win-win situation for the buyer and seller of a home. Of course, it's a lose-lose for Fed and the banks. Who do you think has more economic and political leverage?
Bernanke stated he won't go along the "measured" path of Greenspan. Instead he will do whatever it takes to reach "inflation" targets. Ladies and gents, let me boil it all down for you. Milton Friedman economics view inflation as the root of all evil, and that which must be killed. They view fighting unemployment as less important than fighting inflation. They consider themselves "inflation hawks." But their own theories have been proven wrong - just look at stagflation from the 70's. They explain this away by saying that was an "anomoly." Furthermore, they're all for unemployment - other people's unemployment. God forbid they should lose their oh-so-important jobs. In the long run, we're all dead! Is it too much to ask for a working man to have a decent job at a living wage? I am hopeful, now that we have a new Fed Chairman...but not optimistic.