Letter: Columnist offbase
to the editor
As one of those “rabid” conservatives whose email voted to have O’Reilly’s column appearing in this paper, I am obliged to lead the charge when his position is off base as it was today. He alleges that the collapse of the stock market and recession trends are the devious handy-work of Federal Reserve Chairman Allan Greenspan.
Rather than Greenspan, it was the stock speculation that was out of control when price earnings ratios went to levels bearing no resemblance to rational predictable growth levels. It was the Federal Reserve via Greenspan who hoped to avoid a devastating crash by delivering the belatedly famous “irrational exuberance” warning message that O’Reilly even now describes as “boring.”
Had the Fed not taken the position it did, the market rise would have continued further and longer and the subsequent contraction would have been far more painful and severe; as O’Reilly notes ” we all know markets go up and down.” Moderating the severity of these swings benefits everybody, and the Federal Reserve bank is the common whipping boy charged with the task.
To characterize the economic turnaround as soley the work of Greenspan as the “most powerful man in the world” is typical media oversimplification for, as always, ease of discussion and headline.
When the only tool you have is a hammer, everything tends to look like a nail and such is the case with the Federal Reserve.
The impact of interest rate changes is sudden, but short lived in the stock market and much delayed and very subtle in the general economy. Neither the President or Federal Reserve policy can create prosperity or sabotage the market single handedly or suddenly.
O’Reilly of all people should recognize the danger of leading the public to think that prosperity is the work of central planning (government). The earning, spending and investment level of the baby boomer demographics coupled with productivity gains through technology (automation, cell phones, etc.) to produce the prosperity of recent years, not Clinton, or Greenspan.
The better the public understands what drives or hinders prosperity in a free market economy, the better decisions are made at the polls and in the stock market by the consumers who really drive the market for better or for worse. To that end his demand that “we need some information” is a step in the right direction if an understanding of economics is gained in the process.
This begs the question; when do we start teaching economics in public schools?
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