While the author of this Guardian piece makes fair points, it misses the broader issue, that Greenspan almost certainly should have raised rates sooner and faster to give himself room to cut rates again twelve months from now — when, odds are, the current recovery runs out of money-supply fuel.
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You comment that, “Greenspan almost certainly should have raised rates sooner and faster to give himself room to cut rates again twelve months from now — when, odds are, the current recovery runs out of money-supply fuel.”
Do you really believe that we have sufficiently accurate information that would warrant raising and then lowering rates within a 12 months period? Given all the hedonics and other adjustments, who really knows–for sure–exactly what the economy is doing. Yes the employment numbers on the surface appear to be encouraging. Yet, the WSJ had two stories on Ford and GM on Friday May 7th. Ford was foregoing volume in hopes of getting more profits. Not exactly encouraging, is it? And GM is having to give discounts on its Hummers. How can that be–discounts on the ultimate alpha-male vehicle just as the economy is rebounding? Moreover, on his site on Friday Fleck wrote, “My antennae were up for a stronger-than-believable number due to an email that I received a couple weeks ago from a reader with friends in the right places. He suggested that the BLS had resolved technical discrepancies, so to speak, and that big numbers would be forthcoming, for at least the next couple months. I responded: The powers that be ought to be careful what they wish for.” Given all this conflicting data, I am not sure what the interest policy ought to be. However, I don’t believe that the interest rates ought to be raised and lowered again within 12 months as it will only further confuse everyone.
In Canada, we too had strong employment growth. Then I read the Stats Can press release. Most of the jobs came from the following areas: accomodation and food services, information, culture, recreation, health care, and social assistance. These are not exactly the industries that will propel the economy to great heights. We can only hope that they are indicative of other better jobs to come.
I do agree with you, however, that the money-supply fuel may soon be exhausted. And then what?