Former Fed chair Alan Greenspan has an article in today’s FT. It’s quite blunt about China and the US. “Both may be right about each other,” he says. “America is pursuing a policy of currency weakening,” while China’s reserve accumulation has caused exchange rate suppression for “competitive export advantage”. China and the US aren’t just hurting each other: the joint effect of their policies is to strengthen other currencies, placing those countries at a disadvantage.

Unlike most pundits hand-wringing over the current state of play, Mr Greenspan proposes a solution. It is quite radical. The G20, he says, can propose a new rule through the IMF that “limits the accumulation of reserve assets and sterilisation of capital flows”. “It would be easier to maintain and control than a stability and growth pact,” he says, referring to the “failed” eurozone agreement.

Well, yes, it would be easier. But the fact he has considered a stability and growth pact for sovereign states with separate currencies is staggering. The monetary proposal is also radical. 

Simone Baribeau

In December 2004, the FOMC voted to expedite the release of its minutes to three weeks after they announce their policy decisions (about three weeks sooner than they had been).

Recently released transcripts give us a window in to the committee’s thinking, and the decision was not made lightly. You can imagine that now – as legislators call for increased Fed transparency – the FOMC may be having similar debates about what information is it going to offer to share with the public. 

Simone Baribeau

Who’s afraid of depressing asset prices by raising overnight rates?

Alan Greenspan has repeatedly said that raising overnight rates wouldn’t have been effective in mitigating the housing bubble. But it turns out that at least one member of the FOMC worried in a 2003 meeting that that was exactly what would happen should the Fed raise rates too quickly. 

Simone Baribeau

Today Alan Greenspan is speaking before the financial crisis inquiry commission about the Federal Reserve’s actions during the housing and mortgage boom which preceded the bust. Mr Greenspan has already spoken widely about his view of the Fed’s role in the crisis before Congress, in media interviews, in a recent academic analysis, and in his memoirs. But now it’s the FCIC’s turn to have a crack at him. They’ve got their work cut out for them if they want to get any fresh information from the former Fed chairman.

Update: They do a pretty good job. Note especially that Mr Greenspan says that Congress’s push toward homeownership affected the Federal Reserve’s decisions.

This is the second set of hearings, called “Subprime lending and securitisation and government-sponsored enterprises”. The hearing will last three days and cover 17 witnesses. Mr Greenspan is the first.

The hearing’s over. But here is the FT’s live blog, written as it happened, on the new (and old) Mr Greenspan had to say about the Fed and the crisis. 

Simone Baribeau

Gotta hand it to the Financial Crisis Inquiry Commission – They’ve got their work cut out for them tomorrow, if they want to get any new information at of former Federal Reserve Chairman Alan Greenspan.

Mr Greenspan has written his memoirs, published a 66-page paper on the crisis, and been interviewed by Congress and the media ad naseum.

So what questions could the FCIC possibly ask that would shed more light on Mr Greenspan and his views? We’ve asked the Fed watchers. Here are their responses.