>On Sat, 6 Jan 2001, Doug Henwood wrote:
>
>> >Interesting. So if we extrapolate from this, whether there was a surplus
>> >or deficit never entered into Greespan's thinking when he made this
>> >crucial decision to loosen? So the association of looser policy and
>> >surpluses is completely accidental?
>>
>> I wouldn't say completely accidental; no doubt they were a
>> contributing factor. But his fear of deflation is what pushed him to
>> dump NAIRU.
>
>So what do you make of this famous scene in Woodward's Agenda _where_ the
>Administration and the Fed make a deal, surpluses for looser policy?
>Mainly guff, you think? I think Brad de Long vouched for it in one of his
>newsletters.
Like I said, I think it was a factor - a long-term influence - but proximately, AG was worried about deflation in the mid-90s. If he hadn't been, the Asian crisis probably would have been worse.
Doug