Alan Greenspan’s Money Isn’t Everything


Murray Rothbard had Alan Greenspan’s number a long time ago. (Many thanks to our old friend Marc Faber for bringing this gem to our attention.)

“I knew Alan thirty years ago,” Rothbard wrote in 1987, when Greenspan was first appointed to head the Fed. “and have followed his career with great interest since…Greenspan’s real qualification is that he can be trusted never to rock the establishment’s boat…at no time in his twenty-year career in politics has he ever advocated anything that even remotely smacks of laissez-faire, or even any approach toward it… Alan is a long-time member of the famed Trilateral Commission, the Rockefeller-dominated pinnacle of the financial-political power elite in this country. And as he assumes his post as head of the Fed, he leaves his honored place on the board of directors of J.P. Morgan & Co. and Morgan Guaranty Trust.”

It was pointed out that Greenspan had been a devotee of Ayn Rand, who had the quirky presence of mind to die on Alan’s birthday. But Randism is not laissez-faire-ism. Randism is looking-out-for-number-one-ism…a creed Alan Greenspan never forgot.

We are annoyed at Alan Greenspan, not because he set the U.S. middle class on the path to destruction but because his book, The Age of Turbulence , got so much more attention than the book we wrote with Lila Rajiva, Mobs, Messiahs, and Markets . Mr. Greenspan’s empty tome came out right after ours…and promptly knocked ours out of its brief moment in the limelight.

But now others are getting annoyed at Mr. Greenspan too – for more serious reasons. Says Nobel Prize winning economist Joseph Stiglitz:

“Alan Greenspan really made a mess of all this. He pushed out too much liquidity at the wrong time. He supported the tax cut in 2001, which is the beginning of these problems [deficits didn’t matter to him, either]…He encouraged people tot take out variable rate mortgages.”

The critique we leveled against the Greenspan Fed three years ago is now widely accepted; the feds saw the little recession of ’01…and panicked. They put out too much money and too much credit for much too long, causing bubbles all over the world. So free and easy were American banks and credit institutions during this period that bank robbers stopped wearing ski masks and carrying guns; all they had to do was to ask for the money like everyone else.

The free-floating loot produced a holiday atmosphere that looked to most people like real prosperity. “See,” they said to each other, “the free market works.”

“Greed is good,” said Gordon Gekko. Financial incentives were thought to be the key to everything – higher productivity, higher profits, growth…everything. You want an executive to perform? Give him stock options! You want an investment manager to make you money? Give him a piece of the action. You want to win over the poor and minorities? Let them get in on this great money making machine. Remember all those columns by Thomas L. Friedman that we made fun of? Friedman keeps telling us that the terrorists would come over to our side if they just had more financial incentives…if they had jobs…if they had university degrees…if they had credit cards and mortgages. But it emerged in England that of the terrorist suspects nabbed so far, the average one was a doctor working for the National Health Service!

Money isn’t everything. Especially the kind of money that the Fed creates.

Bill Bonner

The Daily Reckoning Australia

Bill Bonner

Bill Bonner

Best-selling investment author Bill Bonner is the founder and president of Agora Publishing, one of the world's most successful consumer newsletter companies. Owner of both Fleet Street Publications and MoneyWeek magazine in the UK, he is also author of the free daily e-mail The Daily Reckoning.
Bill Bonner

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  1. i still like ayn’s “capitalism the unknown ideal” and “we the living”. also, she wrote one long poem early in her career, and it never got made into a motion picture, for some odd reason !

    looking out for # 1, was some guy in business, that could get in with the sports folks, or something like that. OH! Robert Ringer, good writer btw.

  2. I have read Mobs, Markets and Messiahs and am 2/3 of the way through Greenspan’s book. Of the two, I have to say I enjoyed Greenspan’s book more. He covers in detail the fall of the USSR, stagflation in the 70s and the budget balancing problems of the Bush administration after 2001. The personal history is nice but not of much interest to me.

    Mobs/Markets/Messiahs however was one long skeptic’s rant against pretty much everything (but gold). The chapter regarding why people behave the way they do (basically, to enhance their ability to attract a mate) was interesting as was the final wrap up about the current subprime and debt problems. However, some sections simply lost me. The book threw blows towards men and women who go to war, suggesting they are idiots who cannot rise up and revolt against their masters (even when defending their own country).

    The book questions why the USA had to endure a revolution to gain independence when many other countries (Australia, New Zealand, India, etc) didn’t have to have one). That glosses over the partitioning of India and Pakistan soon after independence and the millions of lives lost during that revolt.

    I find Murray Rothbard’s quote that Greenspan never rocked the boat interesting. One example is during George Bush Senior’s tenure, where the Fed raised interest rates against the government’s wishes and contributed towards Bush’s defeat after 1 term.

  3. I strongly disagree with you, Ayn Rand ideas ARE about laissez-faire.

    What Alan Greenspan forgot was his own ideas about freedom, that he himself put on papper in his essay “Gold and Economic Freedom”.

    This essay can be found in Ayn Rands book “Capitalism: The Unknown Ideal”.

    In this essay Alan Greenspan defends exactly the oposite of what he has been doing as president of the Federal Reserve.

    Jose Luis Navarro
    December 26, 2007
  4. For a softly softly move towards an Australian gold standard you may like to take a look at my modest reform proposal.

    Of course given the opportunity I would go a lot further than this and in my more pure moments I don’t actually advocate legal tender laws. However I really wanted to offer up something modest that fits within our existing monetary paradigm and which could hopefully become an enabler for subsequent monetary reform.

  5. poontang !!

    can’t resist bringing up saint karl marx, who coined the term:
    “lassiez-faire, lassiez passer”

    essentially, it’s the sanctity of contract between labor and capital.

    yet, we need gov’t, lawyers and insurance companies. is capitalism complex or are people greedy and dishonest at heart (imho, NO.)…..

  6. why yes… alan greenspans “money” is everything you all know it’s true… credit and debt are expressions of money.. just as smiles and frowns are expressions of a face…. oh… want truth? integrity ? Only in gold you trust…?

  7. me horny

    edipus anonomous

  8. IMO the “trouble” with policies of Greenspan et al is that they are designed to protect the moneyed in society. The proletariat are just pawns used to achieve the greater wealth of the few. Long-term betterment of the economy and society are of no consideration. Dropping rates through the floor to protect an over-priced Wall Street is one example. Brian

  9. novosonic: For readability, could you please try and make sense when you post comments. I swear sometimes you seem like you have a clue and sometimes you’re barely there.
    No offence intended.

  10. HSL / Newsletter Sample

    October 2004

    [establishment] bureaucrats, not Republicans, neocons, Democrats or liberals, to achieve what could not be achieved in normal times. I wonder how German Jews failed to understand the consequences of the rise of the 3rd Reich. This is not a political commentary as I see no change in present trends whoever becomes president. But ask yourself where this is going as US & other world citizens exchange their hardwon
    freedoms for some perceived yet illusionary protection.

    “It is illusionary because a trained killer can accomplish his deeds regardless of obstacles. Internal visas could easily be gotten by professionals. No airline profile or FBI sketch can stop a dirty bomb. No nitwit airport groper will stop weapon carrying. Privacy is gone & that is the key element of a free society. An un-free society requires the absence of privacy rights combined with the suppression of dissent. The latter was evident in the standby NY ‘holding camp’ during the Republican convention. Should the lady interrupting Mrs Bush’s speech be prosecuted? It memorializes suppression of dissent. Are U all blind to what is in front of your eyes? It is not GOP or Dem. U can’t fight a concept militarily. Terrorism as a concept has for its victory the destruction of our freedoms. Russia & China have turned internally to gold. So will the US as our financial future dissolves into plastic money [which puts bureaucrats in control]. No more written checks & a totally cashless society is what’s ahead. The US$ turned terminal as a reserve currency Sept 7, 04 at a meeting of surviving founders of one of Europe’s wealthiest families. Gold entered the dawn of its supremacy that will last the lifetime of U who read this.

    “It doesn’t matter who wins the US presidency as the Homeland Security grows to protect freedom until there is none left. Study 3rd Reich history & replace the persecuted Jews with the word terrorism. U say it’s different? Was the thesis of the holocaust not sold to the German public as their protection from an illusionary enemy? In principle it’s the same tactic in modern dress.” Thanks Jim for a stalwart contribution to individual liberty. On the heels of this leak of internal US passports (read visa) comes news via NYT that US security officials plan to begin screening airline passengers on internal flights. Handcuffs for all. Freedoms were shrinking before, but now that pace has escalated. Very little left in the US. I hope the non-US majority of world will be aghast & not let it spread outside US borders beyond what has already occurred. If they do, they share the guilt of liberty/privacy destruction.

    •••A letter from Hslm c.anon says: “I got this letter from a Euro bank manager: ‘I regret we can no longer offer U banking services. Recent changes in our procedures, mainly as a result of the US Patriot Act, preclude us from maintaining accounts for American nationals. I am not able to recommend another bank for U. I suspect most are in a similar position as ourselves’.”
    Americans are being locked in & locked out. •••How callous are bureaucrats? Are U just cattle to them? Read this from a 1963 US Federal Reserve System planning document:“If a third or more of our population were killed in an attack (a conservative estimate by the standards of the Rand Corporation’s‘Study of Nonmilitary Defense’) a stronger [higher] estate tax would have a tremendous revenue potential.”

    •••The gates are closing, for residents (& visitors) who want to leave the US. If anyone has a claim on any US resident or visitor, that person can be prevented from leaving. For details see US Biometric Entry & Exit Program summary by Michael Pastore: Aug 5, 04: Millions of foreign visitors have now been processed. Hundreds of criminals, tax evaders, political activists, troublemakers, anti-govt protesters, judgment debtors, suspects” (anyone), people out on bail, witnesses, fathers behind on child support, & immigration/ visa violators have either been apprehended or prevented from entering or leaving the US. Dept of Homeland Security is expanding a pilot for US-Visit program that requires visitors to use a biometric identifier to “check out” of the US when leaving. After Sept. 30, 2004, visitors traveling via VisaWaiver Program. All visitors may be required to present a receipt at departure gate to confirm they checked out at the exit kiosk.•••Losing liberty is easy. Winning it back is almost impossible. Thank US Congress for losing it, via the panicky parrot Patriot Act. No excuses accepted.


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