Greenspan Fed in No Way Libertarian
Letter to the Editor
Alex J. Pollock | Financial Times
September 04, 2009
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Sir,

John Plender ("Wisdom for a punch-drunk Wall Street," August 31) describes the theory of the Fed under Alan Greenspan as "hands-off in the upturn but super-active in loosening policy and rescuing overextended financial institutions," which he says is a "libertarian approach to monetary policy." But to call this "libertarian" is ridiculous.

Libertarian theory would oppose having a government monetary price-fixing committee (which is what "monetary policy" means), which it views as just another probably blundering government intervention. (History would provide a lot of support on this point.) Libertarian monetary policy would be for the price of money to be set in the same way as the price of potatoes.

You can agree or not with this theory, but it bears no resemblance at all to that of the Greenspan Fed.

Alex J. Pollock is a resident fellow at AEI.

About the Author

 

Alex J.
Pollock
  • Alex Pollock joined AEI in 2004 after thirty-five years in banking. He was president and chief executive officer of the Federal Home Loan Bank of Chicago from 1991 to 2004. He is the author of numerous articles on financial systems and the organizer of the “Deflating Bubble” series of AEI conferences. In 2007, he developed a one-page mortgage form to help borrowers understand their mortgage obligations. At AEI, he focuses on financial policy issues, including housing finance, government-sponsored enterprises, retirement finance, corporate governance, accounting standards, and the banking system. He is a director of the CME Group, the Great Lakes Higher Education Corporation, the International Union for Housing Finance, and the chairman of the board of the Great Books Foundation.

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