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If Greenspan Was The Maestro, We're All Doomed

by Drew J Jones Fri Dec 9th, 2005 at 04:00:29 PM EST

If I hear anymore glorifying of Alan Greenspan, I think I'm going to break something.  For weeks, even months, now, the US press has been speaking of Greenspan as though he were the God of the Anti-Inflationist Movement -- of how the now-soon-to-be-ex-Fed Chairman "broke the back" of inflation in America, knowing damn well that it was Paul Volcker, whose contraction of the money supply in 1979 led to a deep but probably-necessary resession, who killed our double-digit inflation rates.

Volcker, not Greenspan, cut inflation from roughly 12% to roughly 3%, and his management of the monetary brake and pedal allowed the US economy to rapidly recover -- contrary to what the Reaganites will tell you, which is that it was Reagan's idiotic tax cuts that brought the recovery.  Not so.

It took a heavy recession and the highest unemployment levels since the Great Depression, but Volcker's commitment to serious and responsible Keynesian monetary policy allowed the true maestro to bring the United States back to solid ground.  The only thing America owes Alan Greenspan is a one-way ticket out of Washington and a thank you for not speaking clearly enough to scare the living shit out of Wall Street.  And I'm glad Foreign Policy is pointing this out.


A few central banks which have produced lower inflation rates than Greenspan's Fed include the UK, the eurozone, and Australia, among others.  Foreign Policy points out that, since 1979, inflation has fallen from double-digits to roughly 4% today:

During Greenspan's 17-year era, inflation slowed further to 2.5 percent per year. But 80 percent of the drop in inflation occurred under Volcker's stewardship at the Fed.  (Emphasis is mine.)

Greenspan met with reasonable success in stabilizing the US economy after the dot-com bubble, but the price of this has been a stunning housing bubble in, financially, America's most important cities.  Whether the housing bubble will prove extremely painful, or whether the US can once again achieve the "soft landing" that Greenspan is so famous for, is anybody's guess.  One thing is for sure: Household debt has risen much faster than economic growth, and something's got to give.

After demanding a massive reduction in the deficit from Bill Clinton, Greenspan was strangely silent on the deficits run by George W. Bush, even going so far as to make the insane argument in 2001 that tax cuts would be a good idea, as a way to avoid paying off the national debt too quickly.  What the hell kind of argument is that?  When a government has the opportunity to pay off its debts, it should take it.  As the deficit exploded -- and every serious economist predicted it would -- Greenspan then, after Bush's reelection, decided to support Social Security privatization, which would've transformed the deficit from a problem, at about 5% of GDP, to a catastrophe, with the federal government borrowing in excess of $10 trillion dollars over the next 45 years.  And that's borrowing only for Social Security -- not including the day-to-day deficit spending of the White House and Republican Congress.

This is not to say that Greenspan is not a smart economist, or that he hasn't performed well.  His work to provide the Clinton administration with some cover during the Tequilla Crisis in Mexico was admirable.  He made some progress in furthering the cause of the Volcker Fed.  But Alan Greenspan is no maestro and has not earned the fame and glory being dumped upon him by the press.

Here's hoping Greenspan enjoys his retirement.  And that Ben Bernanke avoids making the same mistakes.

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Greenspan is a disciple of Ayn Rand. His masters are what used to be called the rentier class. He has performed quite well at insuring this class did well.

As my recent calculation showed this class gained somewhere in the region of $7 trillion in wealth during his tenure. No wonder their paid poodles (oops, I meant pundits) praise him.

The fallout will follow.

Policies not Politics
---- Daily Landscape

by rdf (robert.feinman@gmail.com) on Fri Dec 9th, 2005 at 05:01:47 PM EST
What used to be called the rentier class is now called the have-mores, isn't it?

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Fri Dec 9th, 2005 at 05:11:17 PM EST
[ Parent ]
Is this to be taken seriously?
Criticism of Alan Greenspan
Greenspan continues to support a gold standard and advocate laissez-faire capitalism. [3] [4] His support for a gold standard is somewhat of an irony given the Federal Reserve's role in America's fiat money. He has come under heavy criticism from Objectivist philosophers, most notably Leonard Peikoff and Harry Binswanger, as they believe that working for the Federal Reserve is an abandonment of Objectivist and free market principles.

Increasingly, however, some Objectivists have come to believe that, within the context of the principle of non-contradiction, that Greenspan has not abandoned these principles. These Objectivists believe that he has deliberately geared his policies toward undermining the Federal Reserve system by giving successive administrations a pool of ever-increasing public debt, which will ultimately cause a collapse of the Federal Reserve system, which in turn will clear the path to a return to a gold standard. This scenario has many parallels to Ayn Rand's 1957 novel, Atlas Shrugged, in which the American economy is laid waste by, among other events, the deliberate sabotage of the copper industry by Francisco D'Anconia. It is often cited that Ayn Rand remains Greenspan's favorite author

The more I learn about the objectivists the more they think they're all loopy.

By the way, I can't believe the Wikipedia article does only discusses Greenspan from an objectivist perspective. A large chunk of the "liberalism" and "anarchism" sections of Wikipedia has been hijacked by anarcho-capitalists, unfortunately.

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman

by Migeru (migeru at eurotrib dot com) on Fri Dec 9th, 2005 at 07:02:12 PM EST
[ Parent ]
... and fuck his retirement.  I hope it's not pleasant.  I hope it involves being cold and eating cat food.

Maybe we can eventually make language a complete impediment to understanding. -Hobbes
by Izzy (izzy at eurotrib dot com) on Fri Dec 9th, 2005 at 05:28:52 PM EST
What do you hope Bush's retirement to be like, then? Like this?


A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Fri Dec 9th, 2005 at 05:32:18 PM EST
[ Parent ]
...no.  In all honesty.  And I was just thinking about that myself (I should never post in the heat of anger).  That said, I don't feel bad about wishing cold and cat food on Greenspan -- I am but a weak mortal -- but I wouldn't want that wish enacted or enforced by the government.  I wouldn't take steps.

And if there was a chance in hell this would happen to Greenie or I was aware of actual suffering on his part -- in real life I would seek to relieve it.  I'm not a cruel person (I've been accused of being a big softie if you can believe it).

But we all have these sorts of thoughts within us.  This is why I get so mad when politicians invoke the victims feelings about certain matters like imprisonment or the death penalty and ask "how would you feel if..."  How we feel about such things on an individual level shouldn't matter.  

We shouldn't be so personal when it comes to governing.  The function of government is to protect us from our own and each others' bad impulses.  Not as in being moral and protecting us from "sins," but to be an impartial expression of what we collectively know is "right" and to apply things like the rule of law and regulations without emotion.

So, long way of saying I don't actually wish Greenspan the real person any harm and will not seek to accomplish such a goal, but I do have daydreams once and awhile -- it's my bad side.  It's not right, but I was momentarily gratified by imagining him with mittens and a can of Purina.  Old Testament justice for sure -- I don't approve of myself in this instance.

Maybe we can eventually make language a complete impediment to understanding. -Hobbes

by Izzy (izzy at eurotrib dot com) on Fri Dec 9th, 2005 at 05:55:08 PM EST
[ Parent ]
In fact, I imagine a lot of retirees his age end up cold and eating cat food... I wonder if he ever thinks about such people.

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Fri Dec 9th, 2005 at 06:13:39 PM EST
[ Parent ]
That was the "thought" behind my earlier outburst.

Maybe we can eventually make language a complete impediment to understanding. -Hobbes
by Izzy (izzy at eurotrib dot com) on Fri Dec 9th, 2005 at 06:24:45 PM EST
[ Parent ]
Maybe simply make him live on the minimum social security payments?

In the long run, we're all dead. John Maynard Keynes
by Jerome a Paris (etg@eurotrib.com) on Fri Dec 9th, 2005 at 06:15:05 PM EST
[ Parent ]
Doesn't that amount to the same thing?

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Fri Dec 9th, 2005 at 06:17:15 PM EST
[ Parent ]
Yes it does equal the same thing.  My grandmother worked for over 35 years for the same company (in retail) and her social security check was about $230 per month.  She retired around 1990.

Luckily, she had a small pension from the company as well, bringing her income to about $550, and she also owned the condo she lived in outright, due to one of her brothers, she had good medical benefits, and utilities in L.A were low, so she got by.

But what about all the people who don't have brothers and private pensions?  Minimum wage has barely gone up, so the social security benefits haven't much either.

Maybe we can eventually make language a complete impediment to understanding. -Hobbes

by Izzy (izzy at eurotrib dot com) on Fri Dec 9th, 2005 at 06:31:55 PM EST
[ Parent ]
Just a reminder that you won't find much sympathy for Greenspan on this blog. Just google "jerome a paris" and "bubbles Greenspan" (or ' "bubbles" Greenspan ')

He has been the worst kind of hack, and he has created the biggest asset bubble in history - and we are all going to pay for it.

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Fri Dec 9th, 2005 at 06:17:14 PM EST
Just a reminder that you won't find much sympathy for Greenspan on this blog.

Apparently not, judging by the thread so far.

Be nice to America. Or we'll bring democracy to your country.

by Drew J Jones (pedobear@pennstatefootball.com) on Fri Dec 9th, 2005 at 06:26:12 PM EST
[ Parent ]
We're not very good at being provocative... We have to try harder :-)

Have you tried this diary on DKos?

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman

by Migeru (migeru at eurotrib dot com) on Fri Dec 9th, 2005 at 06:29:39 PM EST
[ Parent ]
Hey!  I tried with my "fuck Greenspan" outburst, but then we devolved into being all reasonable...  btw, it was wishing him an enjoyable retirement what done it.

Maybe we can eventually make language a complete impediment to understanding. -Hobbes
by Izzy (izzy at eurotrib dot com) on Fri Dec 9th, 2005 at 06:36:08 PM EST
[ Parent ]
Devolved into being reasonable?

My suggestion about Bush's retirement was not meant as a criticism of your parting wishes for Greenspan.

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman

by Migeru (migeru at eurotrib dot com) on Fri Dec 9th, 2005 at 06:38:36 PM EST
[ Parent ]
We're not very good at being provocative... We have to try harder

I was operating within your frame. ;-)

Maybe we can eventually make language a complete impediment to understanding. -Hobbes

by Izzy (izzy at eurotrib dot com) on Fri Dec 9th, 2005 at 06:46:50 PM EST
[ Parent ]
Sometimes I give my irony one too many twists and it gets out of hand.

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Fri Dec 9th, 2005 at 06:47:58 PM EST
[ Parent ]
I tried with my "fuck Greenspan" outburst, but then we devolved into being all reasonable...

I like that.

Be nice to America. Or we'll bring democracy to your country.

by Drew J Jones (pedobear@pennstatefootball.com) on Fri Dec 9th, 2005 at 06:46:32 PM EST
[ Parent ]
Finally!  I'm understood.  :-)

Maybe we can eventually make language a complete impediment to understanding. -Hobbes
by Izzy (izzy at eurotrib dot com) on Fri Dec 9th, 2005 at 06:48:35 PM EST
[ Parent ]
C'mon, Izzy, you're always understood. I understood you right from the start, anyway.

The only difference between our ways of thinking is I would really like to see Greenspan cold and eating catfood, if only for a day.

by afew (afew(a in a circle)eurotrib_dot_com) on Sat Dec 10th, 2005 at 12:11:01 PM EST
[ Parent ]
by Jerome a Paris (etg@eurotrib.com) on Fri Dec 9th, 2005 at 06:59:06 PM EST
[ Parent ]
Those of you residing in the rational parts of the world may not have been subjected to as much libertarian nonsense as we in the US.

The principal points are a variant of social darwinism combined with a disdain for helping the less fortunate. The economic conservatives hijacked the laissez-faire aspects and used it as cover for the present US kleptocracy.

Those interested in my rebuttal of the philosophical underpinings can find it here:

Libertarianism
 

Policies not Politics
---- Daily Landscape

by rdf (robert.feinman@gmail.com) on Sat Dec 10th, 2005 at 09:46:02 AM EST
I was exposed to a fair share of in on Wikipedia, trying to convince a bunch of ignoramuses that the terms "libertarian" and "anarchist" had indeed been associated with left "libertarian socialism" for about 150 years, and that "libertarian socialism" is not Orwellian doublespeak. That led to one of my longest Wikipedia dry spell up to that point.

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Sat Dec 10th, 2005 at 11:24:59 AM EST
[ Parent ]


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