Outside the Box

Original Sin

John Mauldin

May 2, 2005

Last weekend I had my second annual Strategic Investment Conference in La Jolla, California. One theme that interested me was that several speakers, including Rob Arnott of Research Associates, Paul McCulley of PIMCO and Richard Russell of Dow Theory Letters, were all negative about Alan Greenspan.

One of my favorite economists, Stephen Roach, of Morgan Stanley gives us a similar opinion. Roach takes a look at the last 6-7 years and the effect that the U.S. Federal Reserve has had on interest rates and bubbles. At some point we must work our way out of the imbalances and hopefully it can be done with a Muddle Through Economy and not a severe depression. That is why I picked Original Sin as this week's Outside The Box.

John Mauldin, Editor
Outside the Box

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Original Sin

By Stephen Roach, Morgan Stanley Global Economic Team, April 25, 2005

In all my years in this business, never before have I seen a central bank attempt to spin the debate as America's Federal Reserve has over the past six or seven years. From the New Paradigm mantra of the late 1990s to today's new theories of the current-account adjustment, the US central bank has led the charge in attempting to rewrite…

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