I agree with you that Greenspan (and the Fed in general) should NEVER have held that much power over currency, and the Fed should have remembered that one purpose behind regulation is to regulate not only the downside of the economy, but the upside as well, so that bubbles don’t form as easily, or grow as large.
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This goes back to my original question, who is regulating the regulators? If anyone is “deregulated”, it’s the Fed. But the markets aren’t deregulated, not so long as the Fed exists, because the Fed is doing the regulating. The Fed may be doing it very poorly and inconsistently, but they are still regulating in the sense of trying to manipulate the economy. Any call for more regulation is simply a call for some agency, if not the Fed then someone similar, having even more power than the “too much” that Greenspan already had. That’s a pretty big contradiction.
Incidentally, the Fed was established in 1913. The Fed’s role in the stock market bubble of the 1920’s is well documented. The recurrent claims above that the free markets are to blame for the Great Depression are patently false.
