Monday, March 08, 2004

The voice of the Fed

When I was in a college economics class, we were required to remember one name -- it appeared on every single test. That name was Alan Greenspan. In this article on Businessweek, Greenspan divulges answers to the three primary factors on which he based interest rates:

"What is the natural rate of unemployment -- the lowest level of joblessness that can be maintained without pushing up inflation? What is the trend rate of productivity growth? And how do you define price stability?"

You'll have to read the article to find out his answers, but be aware that during his term as the Chairman of the Federal Reserve, Greenspan always avoided answering the three questions above.

So why is he divulging information that he has always kept so close to his chest? Quite frankly, he's old. He's held the position of Chairman of the Federal Reserve for 16 years and, according to the article, is expected to step down in the next year or two.

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