I defer to no one in my abiding respect for the gang at Angry Bear, but contributor cactus is testing the waters in the deep end by offering up an affirmative answer to the question "Did Alan Greenspan Illegally Manipulate Presidential Election?". Though I know of no particular provision in the Federal Reserve Act that could be called into play to support a claim of illegality, I'll leave that one to the lawyers and stick to the economics of the claim.
Here, then, is the starting point for the cactus conspiracy (henceforth, the CC):
... we’d expect Greenspan to favor Republicans over Democrats – all else being equal, we’d expect to see unusually tight money when an incumbent Democratic president ran for re-election or a sitting Democratic VP ran for President, and unusually loose money when an incumbent Republican ran for re-election or a sitting Republican VP ran for President. However, not all elections are close, so the Uncle Alan would feel more of an urge to meddle when elections are close...
Therefore, in the five elections that took place under Greenspan’s watch, we’d expect the most meddling in 1992 and 1996 (when the Republican candidate clearly lost in a competitive election), followed by 2000 (when the Republican candidate lost the popular vote but only by a smidge).
The CC proceeds by a little too conveniently redefining the terms of monetary policy manipulation:
And where we would look to see evidence of the Fed’s behavior? Well, the Fed could move the fed funds rate or it can move M1 (cash and its equivalents). M1 has several advantages over the fed funds rate: nobody really pays attention to M1 whereas every change in the fed funds rate is literally national news, the Fed can move M1 every day if it chooses, and its effect is more widely dispersed throughout the economy. For a subtle guy like Big Al, M1 is the tool of choice.
If this is so, "Big Al" would have been very subtle indeed -- offering up an "it all depends on what the meaning of money is" subterfuge -- or he would have been a liar. Let me quote myself, quoting the man:
... at least for the time being, M2 has been downgraded as a reliable indicator of financial conditions in the economy, and no single variable has yet been identified to take its place.
That was 1993. (You can find it in print versions of the Chairman's testimony associated with the July Monetary Policy Report to Congress.) Fast forward to 2000, and this footnote in the July Monetary Policy Report of that year:
At its June meeting, the FOMC did not establish ranges for growth of money and debt in 2000 and 2001. The legal requirement to establish and to announce such ranges had expired, and owing to uncertainties about the behavior of the velocities of debt and money, these ranges for many years have not provided useful benchmarks for the conduct of monetary policy.
The Committee did qualify things with this...
Nevertheless, the FOMC believes that the behavior of money and credit will continue to have value for gauging economic and financial conditions, and this report discusses recent developments in money and credit in some detail.
... but the days of money measures playing a central operational role in the conduct of monetary policy are, for now, gone.
Even if we play along and take the whole money growth thing seriously, there are two problems with cactus's use of real M1 growth to make his point. First, if you want to look at the monetary aggregate the Fed really controls you would look at nominal monetary base. Second, and more critically for bringing the conversation back to reality, financial innovations -- like the invention of sweep accounts -- knocked both M1 and monetary base growth out of contention as stable indicators of the stance of monetary policy. So if we must look at money, M2 really would be the choice -- and here the CC is a little hard to spin:
According to M2 growth, monetary policy was actually tightening up during the election year 1992 and did not look particularly tight in 2000. But I have no inclination to offer that up as evidence of anything. Like Mr. Greenspan suggested in the passage cited above, for most of the decade monetary aggregates just weren't giving up the their secrets. And as for the secret agendas of Alan Greenspan and company, the Taylor rule is out there for all to see -- it really isn't any more complicated, or nefarious, than that.
UPDATE: cactus has some additional thoughts -- here and here.