| Show Jackson Hole Greenspan Confident About Successors By Nell Henderson The Washington Post Federal Reserve Chairman Alan Greenspan expressed confidence confidence confidence con con- Saturday that the central bank will meet the challenges that lie ahead after he steps down next year from the institution he has led for nearly two decades I have little doubt that my successors and theirs will continue continue continue con con- to sustain the leadership of the American financial mancial system inan in inan inan an widening ever-widening global economy economy economy my Greenspan said at the conclusion conclusion conclusion con con- of an economic conference conference conference confer confer- ence here devoted to assessing the legacy of his year 18 tenure as Fed chief In remarks Thursday night as the conference opened Greenspan spoke warmly about the collegiality of the Fed a quality other officials and staff attribute in hi large part to his personal person personal per per- son l style Greenspan warned Saturday that the Fed will face as many uncertainties over the next 18 years as it has over the past 18 For example he said the aging of the US U.S. population will create pressures on the Fed and Congress He has warned repeatedly repeat repeat- repeatedly edly this year that he believes the government has promised more to future retirees through Social Security and Medicare than the nation can afford to deliver He has urged Congress to scale back those commitments to avoid ruinous federal budget deficits or much higher taxes The Fed cannot ignore the potential inflationary pressures inherent in our current federal budget outlook he said referring referring referring refer refer- ring to central bank actions inmany in hi inmany many countries in the past to tomake tomake tomake make government debt easier to repay by stimulating the economy economy economy my and allowing prices to rise rapidly But Greenspan said he assumes the government will act to prevent the ret retirement rement programs programs pro pro- programs grams from causing such budget stress And he made it clear he believes the Fed in any case would resist any political pressure pressure pres pres- pressure sure to allow inflation to take off Several economists at the conference conference conference con con- ference have cited the reduction of the trade gap measured most broadly as the current account deficit as a process that will present challenges to Greenspan's successor whomever er that turns out to be And Greenspan said he expects the Fed to continue refining his risk management approach ch to making interest rate policy He has outlined it previously previously previously as one in hi which policymakers policymakers policymakers policy policy- makers weigh the various risks to the economy and the potential consequences of Each each They then address the most dangerous one rather than the most likely In 2003 for example Fed policymakers policymakers pol- pol policymakers makers icy-makers believed there was a small small but but real I risk re of deflation a dangerous drop in the overall price level They acted to prevent it by low lowering ring interest rates to very low levels even though that action carried with it the risk of possibly higher future inflation Greenspan argued at the conference conference conference con con- ference as he has before that this is the best approach in hi a world of uncertainty and ever- ever changing technology markets and economic relationships The Fed chiefs excellent record strengthens the case for forthe forthe forthe the risk management approach said Allan H. H Meltzer an e economics economics eco eco- o- o professor at Carnegie Mellon University and author of ofa a history of the central bank in remarks Friday Referring to Greenspan's early years playing in a jazz band Meltzer said the Fed cl chiefs policymaking policymaking pol pol- making icy-making saxophone hit many more right notes than wrong |
