The curious case of Greenspan bashing.

Maybe it's the overwhelming animosity throughout the global community towards George W. Bush's handling of the war in Iraq, but TIE remains a bit perplexed by the continued global elite sniping at Federal Reserve Chairman Alan Greenspan. The normally astute British-based financial press in particular has led the charge, and now even the non-financial press is in on the act.

First, the Chairman faced blame for supposedly single-handedly causing the U.S. stock market bubble. Now the charge is that monetary policy has remained too accommodative for too long, risking a bond market bubble. When Greenspan a number of years ago began preaching the wonders of U.S. productivity performance, his critics calmly admonished that while historically productivity growth can jump temporarily, the long-term rate is unlikely to veer from the historic norm.

While TIE has had no problem running articles critical of the Fed Chairman, it is hard to deny that in recent years his insights have proved surprisingly accurate. To begin, the Chairman's initial gushing enthusiasm over U.S. productivity performance seemed odd. Now it's clear the Chairman perhaps wasn't enthusiastic enough. Indeed, the fact that Alan Greenspan and certain of his colleagues such as Ben Bernanke several years ago recognized the possibility of this productivity story saved the world from an early preemptive recession. The American public in particular has enjoyed several years of compounded wealth in a climate of miniscule inflation as a result of the Chairman and certain colleagues following a sophisticated but nevertheless gut instinct instead of listening to the conventional wisdom of the day. Given the recent years of disinflationary pressure, imagine had the Fed raised short-term interest rates as much and as often as some in the Fed-watching community were demanding. The U.S. central bank today would be a laughingstock.

Because of this performance, the U.S. economically has continued to move ahead of the rest of the world, with the widening gap particularly noticeable with the Europeans. If Greenspan is to be blamed, perhaps it is because he has created the conditions that have helped move the U.S. economy further ahead, such that the rest of the world hates America even more than before. You heard it here: Alan Greenspan is the reason the world hates America.

The current U.S. economic expansion is progressing. It may or may not be as long as the previous two expansions, both of which set historic records. No matter, down the road at the end of this third cycle of robust growth Greenspan and his colleagues will no doubt face the unfair gripe: "Yeah, but why can't every quarter be 8.2 percent growth?"

The bottom line: There are no longer any simplistic rules in central banking. Policymakers have no choice but to operate based on the feel in their fingertips (within the confines of course of some conceptual framework). That's why they make the big bucks.