uzzCharts,
not wanting to buck the trend toward grade inflation, has decided to grade
our Fed chairman on a curve. By this standard, Alan Greenspan has done
well. The above chart presents fluctuations in the CRB Spot Index (after
a recent purchase, the Reuters CRB Spot Index), which tracks fluctuations
in commodity prices. Interspersed throughout the chart are the names of
the men who chaired the Federal Reserve during the time spans in question,
allowing the chart to show how much prices fluctuated during the tenure
of each Fed chairman since 1947.
Next, BuzzCharts
looked at price levels before and after the term of each chairman. Did
the price level rise or fall and by how much on an average annual basis?
Price levels under G. William Miller (and President Carter), increased
38.31 on average; under Greenspan's mentor Arthur Burns, prices rose 12.96
per year. Somebody had to put an end to all this inflation, and that someone
was Paul Volcker, who drove the prices back down an average of -3.36 per
year, and then handed the keys to the money machine to Alan Greenspan
who left the price level a mere -0.42 lower than when he arrived.
This means that
the dollar is worth now very close to what it was worth when Greenspan
was first appointed Fed chief in 1987. This does not tell the entire story:
As the above graph shows, there was a fair amount of fluctuation upwards
and downwards during his term. There’s the flood of liquidity in response
to the LTCM crisis, the corresponding sopping up of that liquidity, the
accommodative monetary policy of the late 1990s, and finally Greenspan’s
attempt to tamp down “irrational exuberance” by using the severe deflationary
policy that landed us in the recession of 2001. Still, it seems clear
that when Greenspan deflates, he has the sense to reflate afterwards.
Finally, BuzzCharts
looks back wistfully at the golden years before 1973 when Nixon took the
United States off the gold standard. That was a time when price stability
could be taken for granted.
—
Jerry Bowyer is a talk show host on WPTT radio in Pittsburgh, Pennsylvania.
He can be reached through www.BowyerMedia.com.
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uzzCharts,
not wanting to buck the trend toward grade inflation, has decided to grade
our Fed chairman on a curve. By this standard, Alan Greenspan has done
well. The above chart presents fluctuations in the CRB Spot Index (after
a recent purchase, the Reuters CRB Spot Index), which tracks fluctuations
in commodity prices. Interspersed throughout the chart are the names of
the men who chaired the Federal Reserve during the time spans in question,
allowing the chart to show how much prices fluctuated during the tenure
of each Fed chairman since 1947. 