Greenspan on inflation and bank capital

The arsonist is back inspecting the fire, former Fed chairman Alan Greenspan visiting India the other day, warning U.S. policymakers that inflation could surge and that banks need much more capital to guard against losses. First, from the The Australian Business:

THE US economy may witness double-digit inflation in a few years unless the central bank tightens up its monetary policy, Alan Greenspan warned.

"Unless we roll in this whole degree of expansion, we will be in trouble,” the former chairman of the Federal Reserve told a conference in Mumbai via videoconferencing.

And from Reuters:

Banks in the United States need higher capital than they currently have, Alan Greenspan, former chairman of the Federal Reserve told a Mumbai conference via satellite on Monday.

"I think even in non-euphoria, non-crisis times, we need to have a larger buffer than we currently have," he said.
...
"It is critical, but it has got to be done and it is not going to be easy to do," Greenspan said.

He also commented on asset bubbles noting that it's critical to be able to deflate them without undue harm to the economy and that the identification process is a less important concern.

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