Most recently, the flexibility of our market-driven economy has allowed us, thus far, to weather reasonably well the steep rise in spot and futures prices for oil and natural gas that we have experienced over the past two years. The consequence has been a far more stable economy.
*** In perhaps what must be the greatest irony of economic policymaking, success at stabilization carries its own risks. Monetary policy--in fact, all economic policy--to the extent that it is successful over a prolonged period, will reduce economic variability and, hence, perceived credit risk and interest rate term premiums.