Democratic Party supporters are still all-a-quiver with anxiety
By Dominic Lawson
The Independent
".....It is not the purpose of this column to bring succour to Osama bin Laden at such a moment; but there is one sense in which he is still wreakinghavoc on America and in a way which he can not have anticipated.
In the immediate aftermath of the 9/11 attacks, the US Federal Reserve cut its official interest rate to an extraordinary degree. In August 2001, the Fed's rate was 3.5 per cent, but by December it had been halved to a mere 1.75 per cent. This was designed to maintain business confidence – but it turned out to be far too much of a good thing. With interest rates at or below the level of price inflation, the Fed was in effect giving money away. The direct result was the inflation of a credit-based asset bubble which has now burst with cataclysmic financial violence.
The reputation of the former chairman of the Federal Reserve, Alan Greenspan, has now undergone an exactly similar process: he was praised by politicians on all sides when he acted to boost the country's morale in 2001. Now he is seen as one of the prime authors of a crash all the more devastating for having been delayed.
It's true that in the wake of the dotcom implosion of 2000, Greenspan was already embarking on a series of interest rate cuts; but it's equally clear that al-Qa'ida's attacks in September 2001 caused the Fed to cut still more, with the ultimately dire consequences now observable on every high street.
So as we contemplate the image of an ailing Osama bin Laden, hidden in some Waziristan redoubt, perhaps we can also imagine hearing an unsettling sound: laughter in the dark."
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