Will the U.S. Fed Enable Future Defeats through their Ephemeral Past Successes?
— Posted Tuesday, 9 December 2003 | Digg This Article It all began with an unscheduled 50 basis point rate cut on January 3, 2001History teaches us that no matter how well intentioned economic policies and decisions may be, policymakers never can possess enough knowledge of the complexities of the economy nor sufficiently foresee changes in the economic environment to avoid error. Remarks by Chairman Alan Greenspan Nov 18, 2002 When the U.S. Federal Reserve Board cut interest rates by 50 basis points on November 6, 2002, the Fed included what was tantamount to a shameless lie in its statement: With this action, the Committee believes that the risks [between inflation and deflation] are balanced. At the time, the Fed lied about the risks being balanced (it was clear to everyone that the U.S. economy was in a slump), because it wanted to convey a sense of finality to its easing campaign. Finality: A final, conclusive, or decisive act or utterance. Following the 50 point cut, Wall Street
