European Central Bank researchers do not think much of Alan Greenspan's delphic pronouncements on the US economy during his 18 years at the helm of the Federal Reserve.
According to research published in Frankfurt by the ECB, Greenspan's success in dealing with the vicissitudes of the US economy was probably due more to luck than skill.
Greenspan couched his statements on the economy in such confusing language that they baffled the best brains on Wall Street and Capitol Hill.
Greenspan mocked his own speaking style in 1988 when he said: "I guess I should warn you, if I turn out to be particularly clear, you've probably misunderstood what I said."
The Fed chairman was lauded for his handling of the Black Monday stock market crash that occurred shortly after he first became chairman in 1987, as well as for his stewardship of the internet-driven, dot.com boom of the late 1990s.
However, this expansion culminated in the bubble bursting in March 2000, and a recession in 2001-2002.
From 2001 until his retirement in 2006, he was increasingly criticised for statements seen as overstepping the mark regarding the Fed's traditional role in setting monetary policy. He was viewed by others as overly supportive of the policies of President George W Bush - and of policies seen as leading to a housing bubble that continues to have a negative impact on the US economy.
Greenspan was, nonetheless, considered during that time to be the leading authority on US domestic economic and monetary policy, and his active influence continues to this day. The ECB researchers, how- ever, challenge the idea that Greenspan had superhuman powers.
"Our evidence points toward a dominant role played by good luck in fostering the more stable macro-economic environment of the last two decades," said researchers Luca Benati and Haroon Mumtaz of the ECB and the Bank of England.
This means that if the US faced another economic shock similar to the sharp rise in oil prices during the 1970s, today's Fed policymakers may not be much better placed to cope, the researchers said.
The ECB said the researchers' findings do not reflect its views.
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules hereComments are closed on this article