Unsolicited advice to politicians: keep your mouths shut. Every time you open your mouths, you prove that you can't think for yourself. You show that you are puppets spouting the party line, and you are pushing voters into the camp intending to vote across the board against incumbents.
Wouldn't it be something if Sandy Weill's McNamara moment will get Greenspan to admit that micro-manipulating the price of money via the federal funds rate was a mistake and caused the housing crisis leading to the Great Recession of 2008? That would get me to go apoplectic. Greenspan, in the '90s until the end of his tenure, and Bernanke today micro-manipulated this price. Today it is at zero %, and markets are debating whether the Fed has any means at all to improve the economy.
What tends to be swept under the rug is that the Fed totally botched its mandate of ensuring a stable banking system, completely misunderstood the housing market debacle, and didn't understand the banking sector was in a solvency crisis rather than a liquidity crisis. Other than that, they did a terrific job. Banks loaded up on off-balance-sheet toxic debt as the FOMC focused on pontificating on their views of the likely course of the economy.
Speaking of forecasts - this from Ezra Klein in Why not Uncle Ben's Crazy Housing Sale?:
Klein's article is worth reading because it illustrates so well how top analysts and observers fail to understand economic fundamentals. Here is fundamental number 1, presented in the first week of Econ 101: manipulating prices distorts resources. This can be seen in the minimum wage market, rent control market, and even the Nixon price controls. It is especially true for the price of money via the fed funds rate.In January 2010, the Fed projected that the economy would grow 4.15% in so12. By June 2011, it had revised that down to 3.5%. By April 2012. it was down to 2.65 percent. And in June, officials lowered expectations once again, saying they expect economic once again, saying they expect economic growth to be a mere 2.15% in 2012. Ouch.
Lowering the fed funds rate to 1% in 2003 led to a moonshot in the housing market. Resources gushed into housing. People became mortgage bankers, real estate agents, carpenters, etc. That's what prices do. Then the Fed pushed fed funds above 5% - in effect, saying we didn't need all of the resources that had moved into real estate activities. Think about this. Today they wonder why it is so hard to get unemployment down.
As you read Klein's article and see that he supports buying mortgages and pushing down the rate on 30-year mortgages (again, affecting the price of money), you'll probably scratch your head. This is exactly what got us into the present situation.
They say a definition of insanity is doing the same thing over and over and expecting a different result.
How about a different approach: set a growth rate for M1 or M2 of 3%/year and let the market set interest rates, i.e., set the price of money. Volcker did this, and it broke the back of spiraling inflationary expectations.