Re: MSNBC Greenspan



"Allan Smith" <guesswho@xxxxxxxxxxxxxx> wrote in message
news:MoWKj.33368$rC6.12998@xxxxxxxxxxxxxxxxxxxxxxxxx
Gerry,

Regardless of the name of the Chairman of the Federal Reserve, he has very
limited authority.

The Fed does not issue the Treasury Bonds that create our National Debt.
That debt is created by the Department of the Treasury, and is sold at
global auction. That auction determines pricing, and therefore interest
rates. The Fed has neither authority nor involvement in that process.
Treasury reports to the President, not to the Federal Reserve. Treasury
operates under the debt-ceiling that is specifically authorized by
Congress. Without changes to that authorization, the debt cannot be
increased. Yes, new debt can be created as old debt is retired, but new
debt cannot be created unless Congress authoizes it.

The Fed is an independent entity that is chartered to regulate Commercial
Banks, not the Investment Banks that slice-and-dice debt into
denominations far exceeding the actual debt.

There is a search for a scapegoat going on, and the fingers are being
pointed by the politicians in any and every direction other than at
themselves, where the fault actually lies - that is, in both the
Legislative and Executive branches.

Mr. Greenspan's sins in this realm have the flavor of sins of omission.

He has a bully pulpit like no other. Did he not see a problem with equities
that are fine--only if they appreciate-- bundled with AAA? You could claim
that the fed has no role in it, but they sure think they do now.

I realize that the fed has precious few tools at its fingertips, in terms of
what it can "do." Ben's recent easing of 1.25 points within a week must
sound frenetic to a person like you. My fed memory goes back to Volcker,
and I was earnest about it, as I was exchanging dollars for marks in the
mid-eighties. A quarter point back then was huge. When did you start
looking at US monetary policy? Who were the players?
--


.

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