1) Wall Street’s behavior is not a good starting point to exempt Greenspan (whether he needs an exemption or not is a different issue). WS follows its own goals and, more to the point, its own incentives, which are likely at the heart of recurring pops. There’s herd behavior, there’s risk-underpricing, etc. NO evil, just the goal to make a profit and the incentives to push the system until it breaks. Part of the Fed’s job involves taking the info coming out of WS as an input for its own decisions (for whatever its own goals); processing it should incorporate knowledge of WS biases; and failure to do so is just that. So while I agree that criticizing Greenspan COULD be next-day quarterbacking, Wall Street inflating a bubble within his watch could either be damning (if he could have identified it as such) or neutral (otherwise) evidence, but not a basis for exemption.
2) Bernanke might prove a genius maverick or a total failure, but he CAN be evaluated on the fly GIVEN our current knowledge of econ and finance (which might need re-writing or not after the fact). It’s not fair to compare the ongoing commentary to next-day quarterbacking carried out on Sunday night if it’s based on “what we know.”

Now, having said all that. I *loved* your comparison of a central banker to a central planner. What’s your view of the Fed? I’d wager you think rate-targeting is bad. So a monetary rule plus the role of lender of last resort (under very fixed rules)? Or even less than that? No Fed at all?

Thanks!

1) Wall Street’s behavior is not a good starting point to exempt Greenspan (whether he needs an exemption or not is a different issue). WS follows its own goals and, more to the point, its own incentives, which are likely at the heart of recurring pops. There’s herd behavior, there’s risk-underpricing, etc. NO evil, just the goal to make a profit and the incentives to push the system until it breaks. Part of the Fed’s job involves taking the info coming out of WS as an input for its own decisions (for whatever its own goals); processing it should incorporate knowledge of WS biases; and failure to do so is just that. So while I agree that criticizing Greenspan COULD be next-day quarterbacking, Wall Street inflating a bubble within his watch could either be damning (if he could have identified it as such) or neutral (otherwise) evidence, but not a basis for exemption.
2) Bernanke might prove a genius maverick or a total failure, but he CAN be evaluated on the fly GIVEN our current knowledge of econ and finance (which might need re-writing or not after the fact). It’s not fair to compare the ongoing commentary to next-day quarterbacking carried out on Sunday night if it’s based on “what we know.”

Now, having said all that. I *loved* your comparison of a central banker to a central planner. What’s your view of the Fed? I’d wager you think rate-targeting is bad. So a monetary rule plus the role of lender of last resort (under very fixed rules)? Or even less than that? No Fed at all?

Thanks!

1) Wall Street’s behavior is not a good starting point to exempt Greenspan (whether he needs an exemption or not is a different issue). WS follows its own goals and, more to the point, its own incentives, which are likely at the heart of recurring pops. There’s herd behavior, there’s risk-underpricing, etc. NO evil, just the goal to make a profit and the incentives to push the system until it breaks. Part of the Fed’s job involves taking the info coming out of WS as an input for its own decisions (for whatever its own goals); processing it should incorporate knowledge of WS biases; and failure to do so is just that. So while I agree that criticizing Greenspan COULD be next-day quarterbacking, Wall Street inflating a bubble within his watch could either be damning (if he could have identified it as such) or neutral (otherwise) evidence, but not a basis for exemption.
2) Bernanke might prove a genius maverick or a total failure, but he CAN be evaluated on the fly GIVEN our current knowledge of econ and finance (which might need re-writing or not after the fact). It’s not fair to compare the ongoing commentary to next-day quarterbacking carried out on Sunday night if it’s based on “what we know.”

Now, having said all that. I *loved* your comparison of a central banker to a central planner. What’s your view of the Fed? I’d wager you think rate-targeting is bad. So a monetary rule plus the role of lender of last resort (under very fixed rules)? Or even less than that? No Fed at all?

Thanks!

Whatever, Wilkinson.

Whatever, Wilkinson.

Whatever, Wilkinson.