What should Greenspan do?

[GeorgeF]

1)Lower rates to make capital for Katrina rebuild available.
2)Continue raising rates to support the US$ and control inflation/oil prices?
3)Do nothing because there is a headlight shining in his eyes.

Fight war in Iraq + Afghanistan, rebuild Iraq +New Orleans+ Gaza. Somethings is going to give. But what? Sir Alan is in trouble.

I vote 3 /images/graemlins/smile.gif....no actually most likely 2, you'll see the increase oil prices seep into every sector of the economy next yr, add that with revals of china and malaysia currencies which makes our imports from them more expensive....next yr gonna be real ugly. One thing I'm glad is that I don't own a Hummer hehe

[FishHooks]

How is raising intrest rates going to controll the price of oil? The reason why oil is up is because the demand from China is increasing dramatically not because of the US.

keep pace with inflation, companies can only eat costs for so long before they have to pass it on to the consumer, you are right about china.

[FishHooks]

Inflation is pretty stable now though.

many co's have been absorbing the costs, tho after this hurricane i don't think they will be able to anymore

[GeorgeF]

Increasing rates will suck money out of the economy. Money that would be used for in part for energy uses. Basically increasing intereswt rates increase the value of money itself relative to other things like oil.

[FishHooks]

Even when inflation goes up, usually profits follow the inflation trend.

[Non_Comformist]

Greenspan's job is to control inflation, that's it and that's all. So he will and should do whatever is needed to do that.

[adios]

Right, price stability which involves controlling the money supply to be compatible if you will with economic growth and the velocity of money to maintain price stability.

[FishHooks]

Thats his job in a nutshell, inflation is his most important task but he does a LOT of other things.