Fed "Attempts Rewrite Of Macroeconomics"
Over at Morgan Stanley, Stephen Roach is taking the Fed to task again. "The Fed is not only hard at work in the engine room in keeping the magic alive, but is has also become the intellectual architect of the New Macro."
"Time and again, since Alan Greenspan rolled out his New Paradigm theory in the late 1990s, senior Federal Reserve policy makers have taken the lead role as proselytizers of a new macro spin that condones the saving, debt, property bubble, and current-account excesses of the Asset Economy."
"Chairman Greenspan has made light of traditional measures of household indebtedness, even going so far as to urge consumers to move from fixed to floating rate obligations. Fed governors have also borrowed a page from the Roaring 1990s in denying the possibility of a housing bubble. Governor Bernanke has also led the charge in coming up with a new theory of national saving, that the United States is actually doing the world a favor by absorbing a so-called glut of global saving."
Mr. Roach is right on the mark again and the article is worth the few minutes it takes to read.