Thank you, Mr. Chairman for holding this important hearing. I want to thank Chairman Greenspan for appearing before the committee today. As we all know, when Mr. Greenspan speaks – America, and much of the rest of the world, listens.
Mr. Chairman, it is of vital importance that Congress discusses the many issues that shape our economic and monetary policy so that as we proceed in our legislative agenda we remain ever mindful of working to strengthen America’s economy and seeking to improve the lives of our citizens.
As we all are well aware, our economy has struggled of late. The efforts of the Fed, in attempting to revive our lagging economy, have been well documented. Yet despite six interest rate cuts this year, our economy remains sluggish. Our most prominent economists all seem to disagree as to when the true effects of the Fed’s monetary policy will kick-in. But all agree that the effects, to-date, have been relatively modest. As Richard Stevenson pointed out in his piece in today’s New York Times:
"…in this business cycle the three main vehicles through which lower rates affect business, investor and consumer behavior — the stock, bond and currency markets — have remained persistently unresponsive to the Fed's actions.
There is little doubt that the challenge the Fed finds itself confronting is a daunting one. Consider our current economic condition.
Rising unemployment and the reverse wealth effect seem destined to negatively impact the one thing that has, to this point, served as the safety pin of our economic fortunes – consumer confidence and spending.
The Fed’s task becomes even more daunting when you consider that the global economy is also showing indications of a slowdown.
That said, our economic situation would certainly be much, much worse had it not been for the Fed’s aggressive actions this year. Ultimately, I believe the Fed rate-cuts will provide the necessary jolt to turn our sluggish economy into a healthy one.
The question before us is how we can bring about this economic revival sooner rather than later.
As always, I look forward to hearing Chairman Greenspan’s thoughts regarding the state of our economy and our future economic outlook. Judging from the number of flashbulbs, cameras and tape recorders that are present today, I can tell I am not alone.
Thank you, Mr. Chairman.