Word: feds
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Dates: during 1980-1989
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...Greenspan is moving very cautiously. In the immediate aftermath of the crash, he rushed to reassure the markets by pumping money into the economy. But since then the Fed has returned to a more conservative monetary stance, and interest rates have started to creep up again. The economists foresee a long-term continuation of that trend, with the prime rate that banks charge for commercial loans hitting 9.5% at the end of 1988, compared with...
Some of the forecasters fear the consequences of an upward drift in interest rates. "If the Fed continues on its present course," says John Rutledge, president of the Claremont Economics Institute in California, "then I think that's a danger. The Fed will have to print substantial money next year to keep the economy out of a recession." But in an election year, when the Administration would plainly prefer a loose monetary policy to pump up economic growth, Greenspan could be accused of playing politics at the expense of prudence. Declares Kellner of Manufacturers Hanover: "The financial markets...
Greider documents the fact that the Federal Reserve usually pursues tight- money policies that favor the interests of rather than borrowers. He holds the Fed responsible for virtually every recession that has occurred in its 74 years of existence. Like many economists, Greider argues that the governors were to blame for the severity of the Great Depression of the 1930s...
...notable exception to the Fed's pattern of austerity was the reign of Chairman Arthur Burns. Despite his reputation as an inflation fighter, Burns sometimes sanctioned stimulative policies. Part of his motivation seems, in Greider's view, to have been political, especially when the chairman expanded the money supply rapidly during Richard Nixon's re-election campaign...
Missing from Greider's book are prescriptions for how the Fed might improve its performance. He offers no clue about how the Reserve Board can consistently pursue more stimulative policies without letting inflation get out of control. But what Secrets of the Temple does admirably is explain clearly the difficulties and dilemmas that the Federal Reserve faces -- and the dire results of its mistakes...