CNBC Press Releases

MARIA: OF COURSE, MR. CHAIRMAN, IT'S NOT ONLY OIL WE'RE WATCHING MOVE HIGHER, YOU'VE GOT THE PRICE OF FOOD GOING UP, AND CERTAINLY THE RAW MATERIALS WE TALK ABOUT. HOW MUCH ATTENTION DO YOU THINK THE FEDERAL RESERVE SHOULD BE SPENDING OR PAYING ATTENTION TO THIS IN TERMS OF DETERMINING WHETHER OR NOT TO EXPAND CREDIT FURTHER?

GREENSPAN: WELL, REMEMBER THE NOTION OF LOOKING AT A CORE PRICE REQUIRES THAT YOU PRESUME THAT ENERGY AND FOOD HAVE NO LONG-TERM TREND. AND THAT THEY'RE FLUCTUATIONS ARE ESSENTIALLY RANDOM. THAT IS NOW BECOMING AN INCREASINGLY QUESTIONED PREMISE WITH AGRICULTURAL SUPPLY NOT KEEPING UP WITH RAPIDLY RISING DEMAND, ESPECIALLY FROM DEVELOPING NATIONS AND AS WE'VE SEEN, THE PRICE OF CORN, THE PRICE OF WHEAT, THE PRICE ABROAD RIGHT ACROSS THE WHOLE AGRICULTURAL STRUCTURE, VERY SUBSTANTIAL INCREASES AND THERE'S A MAJOR QUESTION AS TO WHETHER OR NOT THE NOTION THAT IT IS A RANDOM FLUCTUATION AND WILL RETURN TO ITS AVERAGE OVER THE LONG RUN, THERE'S A VERY SERIOUS QUESTION WHETHER THAT'S ACTUALLY CORRECT. CERTAINLY NOT CORRECT WITH THE ISSUE, ISSUE OF ENERGY.

MARIA: SO IT SOUNDS LIKE YOU'RE NOT WORRIED ABOUT THE PRICE OF OTHER COMMODITIES AWAY FROM OIL?

GREENSPAN: WELL, OTHER COMMODITIES ARE NOT AS IMPORTANT LARGELY BECAUSE WE'RE PHASING OUT THE HEAVY INDUSTRY PART OF THIS WORLD ECONOMY. AS I'D LIKE TO PUT IT, THIS IS' AN EVER INCREASING AMOUNT OF CONCEPTUAL GDP BEING PRODUCED IN EVER LESS THAN THE AMOUNT OF PHYSICAL THINGS. AND IT'S LARGELY THE PHYSICAL THINGS THAT WE PRODUCE THAT WEIGH SOMETHING WHICH YOU CAN SEE, YOU CAN FEEL, THAT CREATE ENERGY REQUIREMENTS AND THEY ARE PHASING DOWN.

MARIA: MR. GREENSPAN, HOW HELPFUL HAS THE DOLLARS FALL BEEN IN TERMS OF THE U.S. ECONOMY?

GREENSPAN: WELL, IT OBVIOUSLY HAS HAD A SIGNIFICANT IMPACT ON EXS PORTS, EXPORT DEMAND HAS BEEN NOTHING SHORT OF EXTRAORDINARY IN THE UNITED STATES AND IT'S BEEN A-- IT WILL BE A KEY FACTOR, FOR EXAMPLE, IN THE THIRD QUARTER GDP, SOMETHING IN THE AREA OF A FULL PERCENTAGE POINT. NOW APPEARS TO BE INVOLVED IN THE DOWN SHIFT IN THE TRADE DEFICIT.

Tools:

PrintEmail

Next Post

Previous PostBack to Main Page