It would take a lot for former Federal Reserve Chair Alan Greenspan to repair his reputation. That said, he is providing some sound commentary on the U.S. economy.
Speaking in an interview with Bloomberg TV, the Ayn Rand disciple explained that he is “beginning to see the first signs of inflation” amid a tightening labor market. However, with average wages rising, he does not believe it is supported by productivity growth.
“You’re getting into a system now which has no outcome that’s in equilibrium other than inflation and no productivity growth,” he said.
He thinks the Republicans’ tax cuts did give the economy a boost, but he warns that it will exacerbate the national debt, which is closing in on $22 trillion.
“The tax cut actually did get a buoyancy, and we’re still feeling some of it, but it’s nowhere near enough to offset the actual deficit,” Greenspan said. “You can’t have a tax cut without finding the revenues elsewhere, or you run into problems.”
Greenspan believes a reduction in spending, particularly on entitlements, like Medicaid, Medicare, and Social Security, will allow fiscal sanity to return to Washington.
His remarks come as the federal government recorded a $100.5 billion budget deficit in October (SEE: U.S. budget deficit tops $100 billion in October – up 59% from a year ago).
That is just an insane deficit for a single month.
Alan and others always say cut entitlements but never cut government waste in D.C. or corporate welfare.