Alan Greenspan
Alan Greenspan
Alan Greenspanis an American economist who served as Chairman of the Federal Reserve of the United States from 1987 to 2006. He currently works as a private adviser and provides consulting for firms through his company, Greenspan Associates LLC. First appointed Federal Reserve chairman by President Ronald Reagan in August 1987, he was reappointed at successive four-year intervals until retiring on January 31, 2006, after the second-longest tenure in the position...
NationalityAmerican
ProfessionEconomist
Date of Birth6 March 1926
CityNew York City, NY
CountryUnited States of America
is on an unsustainable path, in which large deficits result in rising interest rates and ever-growing interest payments that augment deficits in future years.
Faster economic growth, doubtless, would make deficits far easier to contain. But faster economic growth alone is not likely to be the full solution to currently projected long-term deficits.
This situation suggests that international investors will eventually adjust their accumulation of dollar assets or, alternatively, seek higher dollar returns to offset concentration risk, elevating the cost of financing of the U.S. current account deficit and rendering it increasingly less tenable,
I am fully aware of the fact that it may not be possible to keep the tax rate down and still maintain some semblance of deficit control, ... But ... I would strongly recommend that the priority of evaluations start with the expenditure side: what can be constrained, what can be reduced.
If we can maintain an adequate degree of flexibility, some of America 's economic imbalances, most notably the large current account deficit and the housing boom, can be rectified by adjustments in prices, interest rates, and exchange rates rather than through more-wrenching changes in output, incomes, and employment.
Lowering the deficit further in the near term, however, will be difficult in light of the need to pay for post-hurricane reconstruction and relief,
Lower budget deficits are the surest and most direct way to increase national saving. Higher national saving would help to lower real interest rates, spurring spending on capital goods so as to put cutting-edge technology in the hands of more American workers,
There is a limit to how long and how far deficits can be sustained,
I came to a stark realization: chronic surpluses could be almost as destabilizing as chronic deficits.
We should not be cutting taxes by borrowing, ... We do not have the capability of having both productive tax cuts and large expenditure increases, and presume that the deficit doesn't matter.
Large deficits will result in rising interest rates and an ever-growing ratio of debt service to GDP (gross domestic product),
The changes in the budget outlook over the past several years are truly remarkable, ... We need to resist those policies that could readily resurrect the deficits of the past and the fiscal imbalances that followed in their wake.
We have to do it in a cautious, gradual way. ... (We) should go slowly and test the waters.
The probability of an unwelcome substantial fall in inflation over the next few quarters, though minor, exceeds that of a pickup in inflation.