Mish: Anti-Libertarian Nonsense on the FedSubmitted by Michael Nystrom on Thu, 04/30/2009 - 10:34
In How libertarian dogma led the Fed astray Henry Kaufman launches into tirade against the "Libertarian Fed" and the "prevailing economic libertarianism". I have a question for Kaufman:
Since When is Constant Meddling in the Markets a Sign of Libertarianism?
The idea that Greenspan or the Fed is Libertarian is absurd.
Greenspan never left the markets alone. At every crisis (real or imaginary) Greenspan slashed interest rates. Here are two prime examples: In 1999 the Fed threw money at non-existent problems such as the Y2K scare. That policy decision helped fuel the Dot-Com bubble. When the Dot-Com bubble burst Greenspan stepped on the gas in 2001-2002 to bail out banks at risk because of poor loans to both Latin America and the internet companies. That policy decision fueled a massive housing bubble not just in the US but worldwide.
Every step of the way, the Greenspan and Bernanke Fed micro-mismanaged interest rates as if they knew better than the free market where rates should be. The reality is the Fed does not know where interest rates should be only the free market knows.