Greenspan, Volcker, New York discussed on Capital Ideas Investing Podcast - Alan Greenspan: The Man Who Knew

Automatic TRANSCRIPT

Greenspan was more straightforward than volcker he talked much much more to the press he left open to the press and he shaped the message with off the record briefings in very cunningly that was part of his machiavellian political skills but greenspan and arrived at the time when it was not noble for the fed necessarily to announce after a decision what the decision was the markets was supposed to in fact that by seeing what the federal reserve open market operations were doing in new york as there was no formal announcement and in next ninety four formal announcements began and they became more common and then communications became more complete and the reason this happened is that as you move from a bank based financial system to capital markets based financial system the road of the fed if it wanted to interest rate economy it had to talk to the markets and persuade market based interest rates traders of those rates to listen and so communication became in itself a policy tool more powerful even than the physical buying and selling of shortterm securities by the open market desk so it's a natural trajectory and benign he took it further more communication and it's gone even further notice it's good or bad in my view it ever shot in recent years because this notion that the fed can guide you about what is going to do in the future and as the vice chairman of today says down fisher central banks should not always tell you what they will do in the future because they don't know what they're going to during the future.

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