Monday DeLong Smackdown: Cosma Shalizi Says, Apropos of the Fed: "The Cossacks Work for the Czar!"
...but averting the prospect of unemployment getting too low, and encouraging the election of Republican presidents--see http://utip.gov.utexas.edu/papers/utip_42.pdf. (It would be good to update that paper with another ten years of data.) The phrase "executive committee of the bourgeoisie" comes to mind. To say it another way--this post, and those of our host's like it, seem far to close to saying: "If only the Little Fathers knew knew what was going on were more careful about their decision theory, they would set things right". And yet, as a wise man used to say often, the cossacks work for the Czar.
I do think it is more complicated than that...
The George H.W. Bush administration felt, very strongly, that Greenspan did not do his job to help reelect George H.W. Bush--that they sat on their hands instead of goosing the economy to punish George H.W. Bush for the Reagan deficits and for his lukewarm concern about closing them. This view on their part was reinforced by Greenspan's willingness to go the extra mile to keep from reining-in unemployment during the Clinton years of the dot-com boom, even though the Federal Reserve models were then blinking red and (incorrectly) forecasting accelerating inflation.
I have been told that it was made clear to Greenspan in 2001 by very senior Republicans that if Greenspan wanted another term--which, I think, he very much did--that he owed the George W. Bush administration forbearance in his publicly-expressed opinions on the 2001 tax cut...
