Greenspan to Bernanke: You're Becoming Irrelevant

You have to wonder if the former Fed Chair has any warms feelings for his successor. Judging by Greenspan's column in today's Financial Times, the answer would be no.

Although Greenspan's ability to move markets has waned in recent months, he's still a news maker. So why is he trying to capture some of the attention on Fed decision day by allowing the FT to run his op-ed? Especially with this choice paragraph (emphasis added):

It has become hard for democratic societies accustomed to prosperity to see it as anything other than the result of their deft political management. In reality, the past decade has seen mounting global forces (the international version of Adam Smith's invisible hand) quietly displacing government control of economic affairs. Since early this decade, central banks have had to cede control of long-term interest rates to global market forces. Previously heavily controlled economies - such as China, Russia and India - have embraced competitive markets in lieu of bureaucratic edict. The danger is that some governments, bedevilled by emerging inflationary forces, will endeavour to reassert their grip on economic affairs. If that becomes widespread, globalisation could reverse - at awesome cost.

To be fair, according to the latest research, Greenspan is on the right track in stating that the impact of monetary policy has been dulled over the last two decades thanks to globalization. But in picking today to make the point, you get the sense that Greenspan is becoming the Michael Jordan of central bankers -- he can't quiet allow himself to let go of the spotlight.

He also took a swipe at Bernanke last week on CNBC, saying that the Treasury Department, and not the Fed, should have backed the sale of Bear Stearns to J.P. Morgan in March.

"What we should not have is the central bank involved in its balance sheet," he said. "Because that balance sheet is the creator of the monetary base and if you allow major fluctuations in that base as a result of other-than-monetary-policy reasons, I think you're taking undue risks with the notion of the stability of the financial system and very specifically the Fed's control of inflation."

There are other former Fed members who refuse to talk to press on decision days. Writing an op-ed amounts to a similar type of communication. Should Greenspan follow the example of his peers?

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