QUOTES BY ALAN GREENSPAN, the legendary FED Chairman
Don't get caught in an intellectual strait jacket. be flexible
unprepared to change your mind.
About Nixon: "He wasn't exclusively anti-semitic. He was anti-Semitic,
anti-Italian, anti-Greek, anti-Slovak ... He hated everybody".
Forecasts, though necessary, are unreliable. Central bankers should be
skeptical and spend time examining what is going on in the economy
right now.
Most oil shocks should not cause recessions. Central bankers do not
necessarily have to raise rates following a sharp rise in the oil price.
Don't try to burst bubbles. mop up afterwards. Trying to burst bubbles
with interest rate increases may do more harm than good. The fed is
better off standing by and dealing with the consequences.
If you try to preserve the past, you will not be able to produce the future.
Recessions are bad as is growth below potential. Let's mandate off
promoting price stability and full employment seriously, avoids
recessions and don’t damp down growth unnecessarily.
Optimization works in theory but risk management is better in practice.
There is no scientific way to compute an optimal path for monetary
policy.
The neutral interest rate is a good guide for policy. The short-term
interest rates is the best policy tool, and the gap between the shorts
rate and the neutral rate, at which policy is neither a stimulating or
restricting growth, is a good guide for policy.
Avoid policy reversals. Rapid changes are damaging to a central bank's
reputation and cause market volatility.
Set your aspirations high. Be realistic about what monetary policy can
accomplish, but try to fine tune the economy, keeping inflation and
unemployment close to where you want them.
Keep your options open. The economy changes so often and so fast that
policymakers cannot rely on formal rules.
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