 |
Then the Fed said... Can He Fret? You Bet.By Rick Horowitz
When I grow up I want to be the Federal Reserve. Talk about influence! Talk about impact! You smile and the world -- or the part of the world that cares about money, anyway -- smiles with you. You frown and the world goes for therapy. Your every twitch can send markets flying -- or plunging. You can expand the money supply. You can contract the money supply. You want interest rates to go up, they go up. You want interest rates to go down, they go down. Is that cool or what? You're some of the most powerful people on the planet, and you don't even have to run for office. No handshakes at factory gates. No fundraisers. No recounts. Not that it's all a breeze, of course. If you're the Federal Reserve -- or at least if you're the chairman of the Federal Reserve, like Alan Greenspan is -- you also have to endure the occasional ceremonial event. A president-elect who's coming to town, for instance, and wants you to be the very first stop on his victory tour. A president-elect who'll pat you on the back right there in public after your meeting (the chairman of the Federal Reserve is not a back-pat position) and announce to the assembled lenses that "We had a very strong discussion about my confidence in his abilities." How nice. This from a guy whose grasp of higher economics during his campaign was pretty much limited to "Let's say these four dollar bills here are the budget..." It's like having Bill Clinton as a character witness. But getting patted and praised by your inferiors -- that's hardly an everyday part of the job, and I wouldn't let it spoil things for me. (Assuming I could even find some inferiors; after all, I might be the first Fed chairman in history who can't quite balance his checkbook.) Anyway, the rest of the job looks like way too much fun. And the most fun of all, I'm thinking, are the pronouncements. That's when the Fed's top policy people get together to discuss what's what in the economy, and when they're done discussing it, they put out a statement telling everyone what they're most worried about. For months now, the thing they've been most worried about has been inflation; the booming economy gets a little too boomy, they say, and things could overheat. That's what they've been fretting about most. Until about a minute and a half ago, when they put out their latest statement, which said that the thing they're most worried about now is a slowdown; the sluggish economy gets a little too...sluggy, they suggest, and we could be talking recession. They never actually used the word "recession." (Or "sluggy," for that matter.) The Fed is lots more subtle than that. What they said was that they now believe "that the risks are weighted mainly toward conditions that may generate economic weakness in the foreseeable future." Bigger words, same message. So then they went right out and cut interest rates, right? To put a little juice back into the economy? Nope. They said they were worried about a slowdown -- but that's as far as they went. They'd be watching things carefully -- that was the message behind the message -- and maybe the next time they meet they'll decide to cut the rates, but for now? No. It was the bureaucrats' version of "Don't make me come over there..." I can do that. I can do that with one hand tied behind my back. Worry about something for months, then suddenly worry about something totally opposite? Tell everyone who'll listen exactly what I'm worried about, even make vague threats to do something about it, but not actually do something about it? This job has my name written all over it! Alan Greenspan, step aside! Or am I being irrationally exuberant? Posted 12/21/00.
"Rick's" wishes you the happiest of holidays and a highly exuberant
new year!
|
  |
Rick Horowitz