Lyle Gramley Quotations

My concern is not with a double-dip recession. It's with the likelihood we are gong to be in an extended period of growth below potential, and that would mean rising unemployment.

Mortgage rates haven't been significantly lower than the rates we have today since the 1960s.

If this deterioration continues, I think the chances of another rate cut are going to increase significantly, and I wouldn't rule out the possibility of an inter-meeting move,

I don't know what the bond market has been worried about. There's much talk about the possibility of inflation beginning to pick up. I don't see any signs of that at all apart from the rise in energy prices, which we all knew was going to take place.

I can't interpret this report as a weak economy, and I don't think the Fed will either. They are going to persist in moving interest rates up until they see greater indications than what we have now that either the economy is weakening, or inflation is getting under control, or both.

I don't think we're going to get a yo-yo, ... We're going to get a first-rate chairman.

I don't think we're going to get a yo-yo. We're going to get a first-rate chairman.

He wondered what I was doing and what he might do. I replied that when he leaves government service he's worth an enormous amount of money.

Greenspan is not a guy likely to brag much, but he'll indicate the economy is still in good condition, that much of the recent bubbling up in inflation is likely to prove transitory, and that fundamentals of the economy are still quite strong despite some of the recent data.

Greenspan did not participate in supplying numbers for that forecast -- he refused to do so -- and sometimes in his testimony he didn't even mention the forecast.

I think the Fed opened the door for a half-percentage-point increase in August, if it's needed,

I think the Fed needs to worry about the possibility it's flirting with deflation if it lets this go too far. When nominal rates get down toward zero, the Fed starts running out of ammunition.

My own preference would be for the Fed to state explicitly what it's aiming at, ... That would be helpful in quieting the bond market. But I don't think it's going to happen.

It doesn't seem to me at all appropriate for a secretary of the Treasury to make such comments in any event,

I think he's well aware of the fact they need to improve (communication). It's very a difficult thing to do. I think they're improving.

The apparent bubbling up of inflation we saw earlier in the year has quieted down again. Basically it's a picture of inflation staying reasonably tranquil. The Fed should like that.

That wouldn't happen with just any Joe Blow.

I would interpret higher stock prices in two ways, ... It's an indication of improving confidence in the economy's recovery, and it increases the confidence and wealth of consumers, adding to consumer spending.

whoever they pick has a considerable degree of background and expertise on monetary policy.

We still face a longer-range deficit problem and that will be exacerbated by increases in Medicare and Social Security payments, ... It would be helpful to bring our budget deficit down longer-term. I worry more about that than this temporary increase in the deficit.

This time, we're starting with an inflation rate that's too low and heading lower, ... What that means is the Fed will sit still until such time as it sees inflation start turning up -- which might not happen until late 2004 or early 2005.

There are a lot of worries circulating around about deflation, ... What the Fed is doing is saying we don't need to worry. If deflation happens, they will counter aggressively, and they have the tools to do so.

Financial markets are going to become uneasy about this because Alan Greenspan has become an oracle,

What the Fed is trying to do, by being more transparent and more communicative, is highly desirable. But there are going to slips along the way. Ben will learn and the markets will learn.

Crisis management has been elevated to a very fine skill under his tutelage.

Anyone who sits at that table knows that if the Fed puts his head up in the midst of an election campaign when it's not necessary to do so, that would be a rather foolish thing to do. You don't want people shooting at you unnecessarily - you'd rather live to fight another day.

The bottom line is that their principal concern is that inflation might go lower, so we'll get the same kind of statement we got last time.

This is a situation where the uncertainties have suddenly become huge. If all the concerns translate into much lower personal spending, then the economy could falter.

This is an economy that's been struggling to keep its head above water for some time, so this kind of a rise in long-term interest rates is not welcome at this point,

It's entirely possible you could repeal tax cuts without injuring the economy if you did it carefully, over a period of time, while offsetting it in part by increasing expenditures you knew were coming anyway or thought desirable. But you couldn't simply remove the tax cuts altogether right away and avoid significant negative effects to the economy.

Then the Fed would be in a very tough spot,

This is a very different recovery than any I've seen -- there's none of the dynamism or momentum we normally see,

Not only is he as mentally acute as the average 77-year-old, he's as acute as the average 27-year-old. He has a phenomenal mind and very good judgment, ... People close to the decision-making at the Fed are almost unanimously in great praise of him, as I would be. I think it's a wonderful thing for the Fed and for the country that he's being kept on.

The Fed is looking at an economy right now that is growing strongly with upside risks to inflation.

The Fed will be content to sit on the sidelines to await more definitive evidence as to whether inflation is going to be a problem or not, ... Setting the election aside entirely, the Fed, looking at the incoming data, would say to itself 'right now we don't want to raise interest rates and we don't need to raise interest rates.'

If you raise interest rates in the face of what you know will be some pretty awful economic numbers, you must have a lot of confidence about the economy's ultimate recovery and a lot of concern about inflation.

Being Fed chairman only increases his value that much more.

His answer was an honest one -- I think the markets misinterpreted what I said.

I don't think the evidence that small businesses are affected adversely is terribly compelling, ... I think tax cuts had a useful role in getting the economy going again, but we probably could have accomplished much of that with a narrower, more focused tax cut.

I don't think there's any doubt they'll go to 5 percent in May. I expect them to sit still after that.

I do think a pause is coming along at some point. My guess has been all along that a pause was more likely in the first meeting of next year than in December. The October employment report strengthens that view.

I don't think he'll let himself be dragged into that kind response to both sides of political fence.

I don't think he is going to go way out on a limb.

He's not going to be the world's oracle.

The markets are helping the Fed accomplish what it's seeking, to slow down the economy a bit, take some of the froth off,