Re: Re: Re: Re: RE: saving and aggregate demand

[Jim Devine <jdevine@xxxxxxxxxxxxxxx>]

At 02:26 PM 10/03/2000 -0700, you wrote:
> > Of course, the fact that it _looks as if_ the Fed has been steering the
> > economy toward low unemployment and low inflation during the last 8 years
> > or so is mostly a matter of luck: if the Fed had followed its vision of
> > the Phillips Curve, we'd still have 6 percent unemployment in the US.
>
> But it didn't. Greenspan overruled Meyer and company and said that they
> should let the unemployment rate drift down and see what happened...

that's what's called luck. They also did stuff like lowering rates in 1998
to try to avoid a spread of the East Asian meltdown. They were just lucky
that this didn't cause the inflation they fear. like the plague itself. The
Krugmanite image of the all-knowing, all-powerful Fed is hype.  It's an
excuse to shift power to irresponsible bureaucrats who are beholden to the
financially powerful. One of the reasons why Greenspan has tolerated "labor
shortages," etc. is that he's afraid of spooking the stock market and
hurting his allies...

Jim Devine jdevine@xxxxxxx & http://bellarmine.lmu.edu/~JDevine