Transcripts Show Greenspan Wanted Housing Bubble Dissent Kept Secret

According to the transcripts of a March 2004 FOMC meeting, Greenspan was quoted as saying that the agency will “run the risk, by laying out the pros and cons of a particular argument, of inducing people to join in on the debate, and in this regard it is possible to lose control of a process that only we fully understand.” Former Fed Chairman Alan Greenspan is basically arguing in favor of keeping housing bubble dissent a secret.

At the same meeting, Jack Guynn, former president of the Fed of Atlanta, who retired on October 1, 2006 , warned that “a number of folks are expressing growing concern about potential overbuilding and worrisome speculation in the real estate markets, especially in Florida. Entire condo projects and upscale residential lots are being pre-sold before any construction, with buyers freely admitting that they have no intention of occupying the units or building on the land but rather are counting on ‘flipping’ the properties–selling them quickly at higher prices.”

“The substantial run-up in house prices, which we have followed in Florida and also see in the populous Northeast and West Coast of the United States, may be at least partially attributable to unusually low mortgage rates influenced by our very accommodative policy,” Guynn warned.

March 16, 2004 transcripts

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