Kuttner on Greenspan and Financial Regulation

Thanks to Pierre Habbard of TUAC for this

“His memoir also confirms Mr. Greenspan’s strong support for free
markets and his deep antipathy to regulation. But I don’t see how you
can have it both ways. If you are a complete believer in the proposition
that free markets are self-regulating and self- correcting, then you
logically should let markets live with the consequences. On the other
hand, if you are going to rescue markets from their excesses, on the
very reasonable ground that a crash threatens the entire system, then
you have an obligation to act pre-emptively, prophylactically, to head
off highly risky speculative behavior. Otherwise, the Fed just invites
moral hazards and more rounds of wildly irresponsible actions.”

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