RE: greenspan and monetary policy

[Clifford Poirot <cpoirot@xxxxxxxxxxx>]

 Mason,

The point is to not provoke the next recession!
-----Original Message-----
From: Mason Clark
To: POST-KEYNESIAN THOUGHT
Sent: 3/6/00 5:18 PM
Subject: Re: greenspan and monetary policy


I have not seen the following argument for higher interest rates:

If monetary policy works, and if it is based on interest-rate control,
when the next recession arrives that policy will call for a decrease
in interest rates.  This can best be done if we arrive at the recession
with high interest rates.  If the rates are already low, how can
monetary
policy be effective?  This logic therefore calls for sneaking the
interest
rates up now, in preparation.  For you golfers:  the backswing is
important.

      Mason

>This article from the "American Prospect" might be of some interest and
use
>to PKT subscribers. It looks like it would be a good article for
classroom
>discussion of monetary policy.
>
>http://www.americanprospect.com/columns/kuttner/bk000227.html
>
>