Never bet against the Fed. That's the advice many in the US are
giving at the moment. It forms part of their core argument that the
US cannot be heading into recession, because the Federal Reserve,
and especially its chairman, Alan Greenspan, is on the case.
Using the last eight years as a guide, that might seem reasonable.
The Fed's monetary policy, as well as Greenspan's influence on the
early years of Clinton's fiscal policy - he told Clinton to
increase taxes or he would increase interest rates - helped turn a
period of recovery from recession into one of the most prosperous
phases of the country's history. And Greenspan's role in keeping
the US and, by extension, the global economy on track after the
Russian crisis of 1998 is well documented.
But to expect the Fed to be able to prevent a recession is surely
to ask too much of one...
