Spencer England reminds us of the Fed Chief’s forecasting history:
The market is rallying on Alan Greenspan’s comments, revealing that traders have inordinately short memories. Four years ago, Greenspan chatted up the structural federal surplus; recall that it was going to drive the deficit to zero.
He actually talked about the problems of the Social Security trust fund having to buy private debt because of a lack of government debt. This bullish forecast was used to justify the Bush tax cuts.
Otherwise, bond traders would have nothing to trade, creating massive unemployment. Now he is using a very bearish forecast to argue for benefit cuts.
But which forecast is correct? It sure doesn’t look like his forecast of March 2, 2001 was correct. Why should anyone believe Greenspan now? His forecasting track record is horrific.
See Jim Rogers’ book Adventure Capitalist. It is even harsher in its criticism of the "Maestro." (See pages 357-59)