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Alan Greenspan

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Alan Greenspan

Since Alan Greenspan became chairman of the FED, the country's economy has reflected many positive results. He has done a terrific job. Allan is a very bright man who is always thinking of ways to prevent problems before they happen in the economic sector of the nation. All economists have been very content with his job just until now. In a recent Time magazine article called Is That Really You, Allan?disapproval about some new rules that this man has suggested for the economy have been highly critized.

The first new rule that Alan proposed was to keep down with producivity. In the article he responds to this new rule by saying that too much efficiency pushes demand and becomes inflationary. This meaning that too much is produced and stock prices are getting higher. When this happens people begin to feel very wealthy and start to buy and buy like crazy. This is something that can cause major inflation in a future. Alan's second rule is to keep stock market prices not rising more than 5% to 6%. Greenspan comments that this has to be done because shares should rise only as fast as the rest of the economy.

These two new rules proposed by Alan are mainly to protect the country from inflation and many economists and other people don't understand it. The article also reflects that many people think that Alan is doing the wrong thing. This is mainly because they are not getting the economic benefits they wish and are not thinking about the country's economic future. A very clear example is given in this article as well. The chief economist of the Deutsche Bank, Edward Yardeni states that, "If the wealth effect continues to boost demand, then why can't productivity continue to boost supply?" I really think that this comment was really said in an angry and ambitious way. This is an economist of a bank and should really try to understand that what Alan is trying to do is right. I also think this man is seeking only his own benefits.

The chairman's decisions have brought many investors to worry. But just as Edward Yardeni, all these people are only thinking about the harm these rules will bring to their own selves. They are not aware that what Alan is doing is taking precautions so inflation will not invade the economy in the coming years.
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