February 16, 2005
COMMENCE THE DEMOCRATIC HOWLS OF OUTRAGE:
Greenspan Urges Fiscal Discipline (Nell Henderson, February 16, 2005, Washington Post)
Federal Reserve Chairman Alan Greenspan today delivered to Congress an upbeat assessment of the U.S. economy, but he called on lawmakers to help bolster U.S. prosperity by restraining the growth of the federal budget deficit. [...]"Benefits promised to a burgeoning retirement age population under mandatory entitlement programs, most notably Social Security and Medicare, threaten to strain the resources of the working age population in the years ahead," he said today. "Real progress on these issues will unavoidably entail many difficult choices. But the demographics are inexorable, and call for action before the leading edge of baby boom retirement becomes evident in 2008."
MORE:
Low interest rates a 'conundrum,' Greenspan says (Rex Nutting, Feb. 16, 2005, MarketWatch)
The decline in long-term interest rates in the past few months is a "conundrum" that defies easy explanation, Federal Reserve Chairman Alan Greenspan said Wednesday.
Actually, it's quite easily explained: in a deflationary epoch you can get a nice return lending at a low rate, so people are.
Posted by Orrin Judd at February 16, 2005 10:48 AM
I saw several stories yesterday about how the Dems were going to get Greenspan to criticize Bush's social security plans (i.e. privatization). Any evidence of whether they were successful or not?
Posted by: AWW at February 16, 2005 11:40 AMHere are some excerpts from the Wall Street Journal's take on his testimony:
During opening questioning by the Senate panel, Mr. Greenspan offered a cautious endorsement of proposed personal retirement accounts, saying it is unclear how financial markets would respond to this type of "forced savings."
and this:
Mr. Greenspan said "in general" it's wrong to make policies that add to the government's budget deficit, but the partial transformation of Social Security to personal accounts is "one of the very rare cases" where increased deficits may not decrease national savings. However, he acknowledged such a transformation would technically shift savings from the government to the private sector. The Fed chairman said he is still trying to get a sense of how the financial markets would interpret the effect on national savings.
Here'a link to the story. Don't know if it will work since its a subscription site:
WSJ.com - Greenspan Indicates Fed To Continue Raising Rates
No. Greenspan was pretty explict about his support for a system of private accounts (though not necessarily for the President's specific plan). He also was in favor of a phased in system to avoid overstressing the financial markets.
Posted by: TimF at February 16, 2005 12:06 PMThe flattening of the yield curve is a concern. Either oj is correct and the bond market is forecasting little inflationary worries or the econonomy will be slowing significantly. The dead weight of the entitlement side of the public sector in a global economy where pricing power for manufactured good is almost non-existent may be a real problem. The cost of government is huge. The value added is minimal. Some one has to pay for it. The wild card in the deck is the growth of government no matter what the environment for the productive sector. We are living through the first time in our history where we are fighting a relatively costly war with domestic spending accounting for such a huge portion of GDP. Something may have to give.
Posted by: Tom C., Stamford, Ct. at February 16, 2005 5:25 PMYo - we're experiencing low inflation, not deflation. There is a difference.
Posted by: Tom at February 18, 2005 4:46 PM