Greenspan Became A Keynesian

An economist in St. Paul doesn't mince words when describing the Fed chiefs' self delusion. "Greenspan has abandoned what seemed to be his long-held belief in monetarism and limited government. He drank the Kool-Aid of Keynesian gas-and-brake-pedal stomping. We are returning to the 1970s."

"Greenspan was expected to follow his predecessor's aversion to jockeying the money supply in response to economic twitches. Perhaps he did for a while. But cautious monetarism did not last long. By the 1990s, his foot alternated between the monetary gas and brake pedals like any Keynesian. Economy growing after 1991 recession? Double the Fed Funds target to 6 percent. A little slowing in late 1995? Back to 4.75 percent. Stock market bubble still bubbling? Back up to 6.5. Too much? Down all the way to 1 percent."

"Try to bind up all economic wounds with the money supply and one will not only fail, but will also infect the patient with the septicemia of inflation and cause inflationary flare-ups at the worst possible times. The long-run outcome will be worse than if one had exercised realistic caution from the outset." Ayn Rand was right about AG, after all.