March 25, 1998

Many economic analysts exhibit little faith in Federal Reserve Chairman Alan Greenspan's ability to fight inflation. Pundits of the Keynesian persuasion are at it again, arguing strong growth and rising real wages lead to increased inflationary pressures. They base their debate on the Phillips curve, a model that depicts higher inflation corresponding with increasing rates of economic expansion. They're longing for what we've come to refer to as a Goldilocks economy - one that is not too cold and not too hot. Another group of Greenspan critics, the monetarist-leaning shadow open market committee, argue that M2 is growing too fast. They feel the central bank should restrain M2 before inflation accelerates. Ironically, these same people canceled their summer meeting last year because they found nothing wrong with the Fed's policy direction. And still others believe we need a whole new economic paradigm. How quickly we forget some things. We're back to fighting the same old battles.

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