Dr. Greenspan I Presume?

Working for the government is a story in and of itself. While I enjoyed my years of service in Columbus, and had an opportunity to work with some fine people, the fact that you are no more than a pawn in a political drama, and therefore expedient, can not be forgotten.

Now that Alan Greenspan has retired as Chairman of the Federal Reserve Bank and has written a book about his career, we see him on TV being interviewed and in print as well. Anyone who spends as many years (17) as head of the Fed, and expects not to be criticized and second-guessed is not living on this planet. In a country this big it is impossible to give that many years of service and not be criticized, especially when you hold such an important and influential position. Being the chairman of the Fed, in my opinion, is like being the Pope in medieval Europe. You have enormous power and everyone prays that your policies will favor their enterprise. In a period of a little over 500 years, ecclesiastic power becomes economic power, but the necessity for a “Pope” to sit at the head of the table remains the same. But, so much for my interpretation of Western Civilization.

My hero is Paul Volcker. Volcker was the chairman of the Federal Reserve Bank before Greenspan and set the table and put the train back on its monetary tracks for the American people. Few people probably even remember this man who came to the Fed when inflation was out of control and monetary policy was in the toilet. The actions Volcker took to raise interest rates and wring the psychology and inflation from the economy may have been unpopular, but they were necessary and they worked. Alan Greenspan walked into a Fed in a whole lot better shape, an economy in better shape and a much less inflationary environment than his predecessor found upon his arrival at the Fed during the Carter administration.

I have not read Greenspan’s book titled The Age of Turbulence: Adventures in a New World, nor do I have any plans to. I was around for Black Monday in October 1987, as I was for the rest of his term as chairman of the Fed. I listened and read his remarks like “irrational exuberance” and his advice to use a variable rate mortgage, over the years of his tenure in The Wall Street Journal every week day morning. The most interesting parts of his story have been quoted on TV, and he has been interviewed numerous times and has been asked about his now famous remarks. A bright man Greenspan, that in my opinion, played his political cards perhaps too often, but nevertheless survived four very different administrations. You have to give him some credit for that alone.

What I find most interesting, is that after a 17 year run in one of the most important and difficult jobs in Washington, that he feels he needs to defend himself after giving of himself for so many years. I guess no matter what we do, or how long we do it, we do not like to be criticized for our service. In my humble opinion, Greenspan did not do a bad job as chairman of the Fed. Yes, he has plenty of critics from both the left as well as the right. Who ever said that being the vicar of the dollar's monetary policy was easy. His job should have been running our central bank, but nothing in Washington is that simple, as Ben Bernanke is finding out. The Fed does not operate in a strictly economic environment. If it did, the job leading the Fed would be so much more simple. It is the politics that makes it so messy. Everyone who has the money to buy influence, wants economic and monetary policy skewed to benefit them and their enterprises. The archbishops and cardinals, that today we call senators and member of the house, plead their case before the “Pope of the Fed” on behalf of their "constituency". I just wish they would still all wear those funny shaped hats, so we could see who the players are and enjoy the pageantry.

Dr. Greenspan was awarded his PhD. in economics in 1977. So, the doc has been practicing the art of calling the economy for over 30 years. Today Dr. Greenspan has a few big clients that want the blessings of the former “Pope of the Fed” and his divine intervention if possible. Mean while, the new “Pope of the Fed” has his hands full with managing monetary policy and bringing about a recovery from the present crisis. Whether Greenspan left the table as well set as his predecessor left it for him, I will let others decide. I am sure there are a few more good books to be written in addition to the ones that are already out there. No one is denying that the present financial crisis is as big as anything we have seen since the 1930's. Stay tuned.