"Uncertainty" In Economic Crystal
Ball
The key economic word for the year is 'uncertainty'. It was uttered by
former Federal Reserve Chairman Alan Greenspan. When Greenspan opens his mouth,
economists listen.
The fact this inflation-phobic had the courage to state that word is
significant because he never gave the impression anything was uncertain while as
Federal Reserve Chairman he reassured three Administrations his options were
always the right path.
As a guest on CNN's show GPS this weekend, Greenspan said uncertainty now
represents the biggest problem plaguing the economy. He failed to mention the
massive debt or the burgeoning mountain of regulations business has to deal with
daily. But he did, under direct questioning, admit the unprecedented printing
press run has no easy answer because "None of us has handled that type of
problem before."
Greenspan acquired his fear of inflation at an early age. After witnessing
the harmful effects of unaddressed inflation during the Gerald Ford and Jimmy
Carter years, Greenspan spent the rest of his tenure at the Fed making sure
inflation couldn't get a solid toehold. Inflation, in effect, became his
Personal Enemy No. One and everything he did or said went to stopping
inflation.
But his successor, Ben (BS) Bernanke, had not participated in the inflation
fear of Greenspan and his policies reflect that. BS began the printing press
run, something no country in history has been able to start and then extricate
itself from. That is where much of Greenspan's current 'uncertainty' comes
from.
"Janet Yellen (current Fed Chair) is an excellent economist, very
intelligent. She will handle Fed policy as well as anyone I can think of," said
Greenspan. Then he added a curious assessment. "She's as qualified as anyone I
know to deal with it [the Fed's on-going stimulus program] and sufficiently
knowledgeable with that extraordinary staff at the Federal Reserve to handle
it."
Extraordinary staff? That bunch of central bank clodhoppers? As stated,
they embarked on a course of action that no country in history has managed yet
he believes they can handle it! What powers or skills do they have everyone else
in history has lacked?
Greenspan touched upon the crux of the problem before he got to the Yellen
question. "The extent of government intervention has been so horrendous that
business cannot decide what to do about the future."
That's a large mouthful of truth which no amount of knowledge can digest
and come up with a positive outcome for business. From ancient written history
to modern times no country has been able to reverse course and set its private
sector free to operate once the yoke of government has been inserted upon its'
decisions. No country in history has been so overwhelmed by bureaucratic red
tape as the United States over the past 12 years.
From the Patriot Act to Obamacare, business leaders have been strangled by
a daily rewrite of the regulations affecting how they can conduct their
business. If there is any "uncertainty" about the future it is which direction
the government will move next--what new roadblock will be established to prevent
invention and initiative from would-be innovative citizens.
Greenspan mostly dealt with "the long-term future" because it is tomorrow's
ruling that hinders today's decisions. Uncertainty creeps in when what is
perfectly legal today is deemed criminal or at least politically offensive to
the government's army of bureaucrats in the near future.
To achieve compliance, business has to add to its costs or forego some of
its profit. Either way, the business is less desirable as an asset than it was
before. Business decision-makers have faced this problem every day for far too
long to have any faith in the future.
They don't yet know what tomorrow's problems may be because the government
has not yet finished intervening. The 'uncertainty' in the economic mood matches
the 'uncertainty' in the EPA's climate-change data.
When you are a blind man, standing still while you still have the option is
better than going forward or back, moving left or right because you know you are
OK where you are at while any movement may drop you off the cliff. That is the
very definition of uncertainty.
That is what Greenspan must be feeling to have said anything.
But no person of business can stay in one place. Their nature does not lend
itself to standing still. They have to act or they don't stay in business. That
is the essence of the backbone of the economy--the small business.
But this "uncertainty" is causing hesitation. "Uncertainty" is why this
country has a non-recovery recovery in its economic status. It is why Wall
Street, inflated by the backlog pressure of the printing press run, doesn't show
where the state of the economy really is. It is why the bureaucrats have to find
creative ways like inserting a 'knowledge' factor to show the current policies
are working.
"Uncertainty" is a terrible word for an economist who has spent years
developing massive equations to measure the immeasurable to use. But it
succinctly sums up everything that is not working for the average American now.
And, sadly, 'uncertainty' is why the U.S. economic future seems so
bleak.
"I have sworn on the altar of God eternal hostility
to every form of tyranny over the mind of man."--Thomas
Jefferson
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