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Greenspan Speaks out—Again
Market Forces Won't Fix the Deficit
March, 2005

Don't expect Alan Greenspan to scream like Howard Dean—about the debt and deficit, or anything else. He can't. If he raises his voice—and sometimes when he only raises an eyebrow—the stock market reacts like it was doomsday. But pay large attention when he speaks out in reserved tones, as he did on March 10th.

The resolution of our [trade] deficit and household debt burdens does not strike me as overly worrisome, but that is certainly not the case for our fiscal deficit, which, according to the Congressional Budget Office, will rise significantly as the baby boomers start to retire in 2008. Our fiscal prospects are, in my judgment, a significant obstacle to long-term stability because the budget deficit is not readily subject to correction by market forces that stabilize other imbalances.

Remarks by Federal Reserve Chairman Alan Greenspan
at the Council on Foreign Relations
March 10, 2005