The answer is no, says Joseph Salerno. The Fed's performance has been astoundingly bad throughout Greenspan's tenure as Chairman. Perhaps worse, Greenspan has been a relentless purveyor of economic fallacies designed to obscure and justify this egregious performance. However, his departure from the stage might not be cause for unalloyed joy among proponents of sound money—Ben Bernanke could be lurking in the wings.
What free-marketeers don't always make explicit is that the government and media Chicken Littles are right in part: Corporations are indeed out to make a profit. Of this point we must first observe the first lesson of business economics, as taught by the classical school markets in the 18th century. The institutions of the market channel questionable motivations to a social end.
Morgan Reynolds: "When the Bush administration took office in January, 2001, a downturn was already underway. The president and his coterie said so and blamed Clinton, but then hushed up. That was a mistake—a dose of truth about the economy would have worked better—but they learned an early lesson about psychology and confidence in Washington, D.C. Politics is all about (the) confidence (game) and prestige in the nation's capital."
It's easy to be depressed when you look around and see the state of monetary affairs, writes Christopher Mayer. But as many historical vignettes show, we have one great force in our favor. The inability of governments to maintain fixed exchange rates in the face of opposing market forces is proof of the impotency government managers.
Since the early 17th century, American governments (colonial, state, and federal) have tried and failed to restart business expansions by reflation, writes Scott Trask. But new money in the system is no substitute for genuine production. It is too early to see the long-run consequences of the Bush-Greenspan reflation, but if the past is any guide we can expect the next decade to more resemble the 1970s than the 1990s.
Overall economic efficiency does not concern GDP growth per se, writes DW MacKenzie. It concerns the satisfaction of consumer demand. Increased military spending does not directly satisfy consumer demand. Nor do increased deficits and monetary stimulation substitute for market forces. They only set in motion another round of cyclical economic trends.
Many economists have suggested that the weakening in the US dollar could actually be good for the economy—since a weaker dollar will boost manufacturing production, which in turn will lift employment and all this will set in motion economic growth. Nonsense, says Frank Shostak: the emergence of competitive devaluations is the surest way of destroying the market economy and plunging the world into a period of crisis.
The consultation of oracles, a practice long thought dead, continues on today in many forms, perhaps in a more subtle and less institutionalized than during antiquity, but powerfully nonetheless. The head of the Fed, writes Christopher Mayer, is a good example.
Government has total power to make and break businessmen. This state of affairs compels businessmen, especially large, successful businessmen, to pay regular extortion money to politicians and government officials. They have to pay bribes, in the form of "campaign contributions" and "donations," to various pressure-group organizations in order not to be harmed or altogether destroyed.
To listen to mainstream economists, including Wall Street analysts, what destruction Isabel wrought is really a bonanza for the economy. Maybe, if we are really desperate to improve the local economies of our cities and towns, what all of us ought to do is bulldoze our property to the ground. Think of all the jobs that will be created when it becomes necessary to rebuild our houses, workplaces, downtowns, shopping malls and other centers of commerce from scratch.
