Isn't it a problem that your explanation of Greespan's Fed has a theoretically unjustified point of departure?
> > >
> >>there are
> >> theoretical reasons to think that the "equilibrium real interest
> >> rate" should increase with increases in the rate of profit.
> >
> >What are they?
> >
>
> That if the interest rate is permanently below the rate of return on
> capital, investment will boom until the marginal product of capital
> drops, growth slows, and the rate of return on capital falls...
I'm sure you know that many heterodox economists argue that the concept of capital as a "thing" with a marginal product is logically inconsistent. Therefore, it makes no sense to us to evaluate the level of interest rates set by the Fed in terms of a natural rate derived from such a concept. We derive explanations of monetary policy instead from the concept of capital as a social relationship.
Edwin (Tom) Dickens