Greenspan: Economy 'Definitely Soggy' But Fed Not at Fault

The economy is "definitely soggy," but that does not have anything to do with the Federal Reserve's decision to cut interest rates, and there will not likely be a recession, former Fed Chairman Alan Greenspan said Friday. 

"It's definitely soggy, but it's sogging around the world," Greenspan told Fox Business' "Mornings With Maria." "This is a sluggish economy at this stage. The long term is unquestionably negative, but there are positive signs in the short run, which suggest we're not about to tip into a recession."

Greenspan added the Fed cut interest rates because the national economy is weakening, and rejected the argument that the rates were cut to keep up with other countries that are also cutting their rates.

"The Federal Reserve Bank in the United States deals with the American economic situation," he said. "It is very rare that foreign international countries have an impact on our direct decisions to make interest rate increases or cuts."

Show host Maria Bartiromo cited The Wall Street Journal survey showing economists see more than a 63% chance the Fed will force further interest rate cuts in the fall, but Greenspan said he does not "know who those people are" that would say that.

"I'm not saying one way or the other," Greenspan said when asked if he thinks there will be more interest rate cuts. 

"I know what the Fed is doing," he added. "I know what it just did. I know what the type of analysis that is going on within the Fed that determines the next move. I don't think there is anything out there that suggests anything imminent."

Meanwhile, Greenspan doubled down on an opinion piece he and fellow former Fed Chairs Paul Volker, Ben Bernanke, and Janet Yellen wrote last week for The Wall Street Journal,   in which they called for an independent Federal Reserve.

"I think what we're concerned about is political forces will inordinately drive choices of who will become members of the Federal Reserve Board, irrespective of their qualifications," he said. "Politics does not, or should not, enter into this whole question."

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