Washington, Tuesday (FA Wire) - Testifying before Congress, Federal Reserve Chairman Alan Greenspan outraged many conservatives by telling lawmakers today that given downgraded projections on economic growth, further rate cuts were not out of the question, but massive cuts were not a possibility.
“It’s clear to us there is a downside limit – zero being the ultimate lower bound.” Greenspan explained to a baffled Senate Committee on Banking, Housing, and Urban Affairs.
Republican response to Greenspan’s assertions was swift and sharply negative. “What is this ‘zero’ balderdash?” asked committee chairman Richard C. Shelby (R-AL), “Rates are too high. Cut ‘em. That’s how it’s done.” Greenspan responded by producing charts, figures, and an elementary school math textbook, but lawmakers were not persuaded.
[Some economic theorists argue that there is
no rate lower than “zero.”]
Afterwards, many Banking Committee members expressed a sense of disappointment and even betrayal. Sen. Shelby alleged that by manufacturing “the so-called zero problem,” the Fed might be siding with Democrats in an effort to influence the next elections.
“It’s very sad that Greenspan feels the need to politicize the process by introducing this kind of fuzzy math,” said Sen. Jim Bunning (R-KY). Fellow committee member Sen. Rick Santorum (R-PA) agreed: “This sort of statement, coming from a government official, opens the door for fractions, long division, rape, incest, bestiality, atheism, decimals, homosexuality, algebra, crotchless panties, vegetarianism, child pornography, witchcraft, trigonometry, and those weird German poop videos.”
The Bush administration was equally disappointed, especially with Greenspan’s pessimistic new economic growth projections. “It’s irresponsible, to say the least,” said White House spokeman Scott McClellan. “Sure, the deficit might be soaring at the moment. But as the President intends to reveal in his next State of the Union Address, our latest economic intelligence sources tell us that by the middle of next year, money will rain from the sky. Definitely. By December at the latest. And that will benefit all Americans.”
Fanny Roborat
12 comments
John Isbell
July 15, 2003 at 2:58 pm
1Send this to Paul Krugman and Brad DeLong. I think they will both appreciate it.
Ken
July 15, 2003 at 3:38 pm
2Actually, I can’t laugh at this. How big a stretch is it to think that they might allow negative lending rates - meaning that the government would begin actively subsidizing first the banks, and then the corporations by letting them pay back less than the total value of a loan. It’s all about investing in America, right? We all pay more taxes so the goverment can finance the corporations who then send jobs oversees to increase profit margines so that the top 1% of the population can earn a little more money. Oh, but it’ll trickle down, right???
Beth
July 15, 2003 at 4:50 pm
3I’ve been saying it for years. The schools start teaching the theory of evolution instead of good old-fashioned creationism, and what’s the result? Liberalism, atheism, and math.
michael (dc)
July 15, 2003 at 8:03 pm
4Bravo Adam. So many folks skewered in so few words. A mini-masterpiece.
Linkmeister
July 15, 2003 at 8:49 pm
5It’s a shame. Bunning used to know that it was “three strikes, four balls, three outs to an inning,” too.
julia
July 15, 2003 at 10:05 pm
6Brilliant. Just brilliant.
For a moment or two in the first paragraph I was wondering if it was a news story is how brilliant this is.
I think I’ll go bang my head against a wall now.
Don
July 16, 2003 at 2:37 am
7Sounds as if they are trying to break the “Zounds!” Barrier.
Murray
July 16, 2003 at 12:15 pm
8Once the “Education President” gets all students to think, act and talk like himself, it will all just straighten out. Two Chapters of Genesis will give us all we need to know about biology, and geology. A few more chapters here and there will teach us everything else, including math, economics, and how to structure our laws to benefit the neediest of the uberwealthy. That will leave lots of time for the students to spend doing important things like GOP fundraising.
Wayne
July 16, 2003 at 1:31 pm
9I agree with “Shelby.” It seems obvious to me that a continuation of administration policies would do the trick. But the program should be carefully crafted.
It is obvious that one of the current junta’s core beliefs is that poor people (less than $100,000 annual income) really don’t know how to handle money as well as “nice’ people.
Therefore a policy of adding a negative interest rate of, say, 10% (which can be easily and quickly found in the Social Security Trust Fund) to every loan of 1 million dollars or more for persons with after tax income of, say, $100,00 would put more ready cash in the hands of the job creators.
And, voila! (if you excuse my French) the economy gets yet another boost.
I mean, this is not rocket science, you know
val
July 16, 2003 at 4:53 pm
10maybe we can call this “zeronomics”. It goes pretty well with another little word I made up for Bush: Americentric.
t.a.
July 16, 2003 at 5:23 pm
11german poop videos? dang, now i gotta go do more internet research….
Mary
July 17, 2003 at 9:59 am
12And we used to laugh at “vodoo economics”……..