He just can't leave well enough alone.

The economy is doing fine without his dour countenance and his tightening of the purse strings.

We're enjoying the impossible dream of economists: the lowest unemployment in thirty years, coupled with low inflation.

So what does Greenspan do? He hikes interest rates by half a percentage point.

Used to be that economists said the "natural" level of unemployment was 6%, as if that were some divine law. Well, now it's 3.9%, and the sky hasn't fallen. Inflation is running at 3.7%, with the core consumer price index significantly lower than that.

What's Greenspan so worried about?

Well, here's what he said when he raised the rates:

"Increases in demand have remained in excess of even the rapid pace of productivity-driven gains in potential supply, exerting continued pressure on resources. The committee is concerned that this disparity in the growth of demand and potential supply will continue, which could foster inflationary imbalances that would undermine the economy's outstanding performance."

Translation: People are spending too much money, unemployment is too low, and inflation might increase.

But why is he so concerned about inflation?

Not just because he likes to play the part of Scrooge, but because he is protecting certain business interests that are threatened by inflation.

Let's be clear which ones these are.

It's not manufacturers.

The National Association of Manufacturers came out against the rate increase, calling it "unnecessary shock treatment." And no wonder: Businesses will have to pay more to get loans to buy equipment.

And it's not consumers, who, as long as they are employed and their wages are going up, can afford modest increases in inflation.

No, it's banks, whose representatives, by the way, serve on the Fed board.

Manufacturers, consumers, workers, and debtors are not represented on the Fed's Open Market Committee. Creditors are--in the persons of the presidents of regional Reserve Banks, who are chosen by the commercial banks in their areas.

These creditors worry when inflation goes up because then they aren't making as much profit on the fixed-rate loans they have floating out there for everything from cars to houses.

That's why inflation is such a bugaboo for Greenspan and the Fed.

The Fed attacks inflation by hiking interest rates so high that companies can't afford to expand and consumers can't afford to borrow as much for new houses, cars, computers, refrigerators, clothes, and other goods. As demand for products goes down, companies lay off workers, and inflationary pressures ebb.

That's how it works.

And it's no secret.

As The New York Times reported Wednesday, Greenspan's emphasis is now on "halting the decline in unemployment."

There you have it. He wants to throw more people out of work!

And who loses by this policy?

The unemployed, obviously, and those workers who still have jobs but will now have less leverage to bargain for higher wages.

Note: Wages have risen only 3% a year over the last few years. And last year, even as unemployment went down, wages did not go up. That is contrary to basic economic theory.

"Pay should be climbing faster and faster as the unemployment rate falls ," Louis Uchitelle wrote in The New York Times on February 20. "But wage increases, instead of getting bigger, are getting smaller." He noted that 90% of the work force last year had smaller wage increases than the year before.

Still, Greenspan recoils from even the mere prospect of higher wages.

He doesn't think you deserve it, and he's going to make sure, one way or another, that you don't get it.

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