Former Fed chair Alan Greenspan says coming inflation will be the real impediment to economic recovery. Greenspan noted that “the US is faced with the choice of either paring back its budget deficits and monetary base as soon as the current risks of deflation dissipate, or setting the stage for a potential upsurge in inflation.” Do you think Bernanke will be able to strike the delicate balance between the two? He faces the unenviable challenge of raising interest rates as the threat of deflation disappears. Greenspan also noted there is a looming threat of over-regulation from the government, which could crowd out the important economic process of creative destruction. Ever the Ayn Rand disciple, Greenspan added that the “best chance for worldwide economic growth [is to] continue to rely on private market forces to allocate capital and other resources.” Are you concerned that increased government involvement in the private sector economy will stifle innovation?
