Less than a year after testifying that his free-market approach to the financial sector was "wrong 30 percent of the time," Alan Greenspan, former chairman of the Federal Reserve, is taking aim at what he calls "government activism."
Writing in International Finance, Greenspan rails against the "frenetic pace of new financial regulations," which he says have hampered "what should be a broad-based robust economic recovery."
Greenspan directs no ill-will at the Federal Reserve's decisions in the wake of the financial collapse, nor at the Troubled Asset Relief Program (TARP), both of which he believes "were critical in assuaging the freefall."
Other regulatory structures, however, don't get off so easily. The former Federal Reserve chairman casts a skeptical eye toward both the $814 billion federal stimulus and "housing and motor vehicle subsidies," believing that the government's decision to support prices "delays the liquidation required to restore balance to market supply and demand."
Greenspan also calls the 2010 Dodd-Frank financial reform bill "impossible to judge" at the present moment. Still, he foresees it causing "many unforeseen market disruptions" in the future.
He appeared on CNBC's Squawk Box early Friday morning to further discuss the issue, saying that while the "degree of activism has actually gone down" in the last six months, he predicts the implementation of the "internally contradictory" Dodd-Frank Act will soon surface as a chief economic issue. Here's more from Greenspan:
What we're going to find is the unexpected consequences of much of the new regulations that are going to come as a result of Dodd-Frank are going to be reversed... That is going to create very high degrees of uncertainty.
Greenspan, famous for his dedication to free-market ideology, acted as Chairman of the Federal Reserve from 1987 to 2006. In the wake of the 2007 financial collapse, many scrutinized his decision to lower federal interest rates in the mid-2000s. In 2008, he admitted his tendency to avoid regulation might have been "partially wrong."
WATCH CNBC's interview with Greenspan:
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