Comment on the Greenspan Era

by BWK ~ June 9, 2008

This from the 5min Forecast:

P.S. “Greenspan blamed the era of low interest rates over which he presided,” Addison writes by e-mail this morning, “on the end of the Cold War and the fall of the Iron Curtain.” We didn’t get much more from him than that. He and the film crew for I.O.U.S.A. were in Washington, D.C., today getting some last-minute interviews for the film… including a sit-down with none other than Alan Greenspan. We’ll hear a lot more from Addison and Alan, I’m sure, when Addison returns tomorrow.

Hmmm…

The end of the Cold War? The fall of the Iron Curtain? Who’s Alan Greenspan kidding?

Spoken like a man on the defense. Here is Greenspan, saying as little as possible in as cryptic a fashion as he can manage. It used to sound profound. Now it comes across as pathetic, even delusional.

Greenspan is used to giving people the mushroom treatment — keep ‘em in the dark, and throw in some manure every now and again for nutrition. Worked for 18 years in his appearances before Congress. Those fools never appreciated the utter con job that Greenspan wa pulling on them.

But now Greenspan has to know that he is in the fight of his life… a race for naming rights to his reputation.

Will Greenspan go down in economic history as the most despised man since Herbert Hoover? Heck, Hoover was basically OK except for his actions after the 1929 Stock Market Crash. But I doubt that anyone will be naming any big dams after Greenspan.

Really, Greenspan knew better…. He was an old Gold Bug. If he had an ounce of honor, he’d have stood up to the politicians and Wall Street Suits and said, “No, I will not expand the money supply by even one more dollar. Enough is enough.” Then he and the nation — if not the world — would have taken the necessary recession.

His effigy would burn on a thousand lamp-posts in the land of Populism and easy money. But Greenspan would have squeezed the economic poison out of the economy. The bankruptcy courts of the world would have done what bankruptcy courts do. And in time we’d have moved on.

Instead, Greenspan mentioned the term “irrational exuberance.” He took some heat because the market declined. Thereafter — spooked by the media circus, the equivalent of the flash-bang grenades of ignorant commentary — he just wimped out and openend the credit-valves.

Opening the credit-valves was not Greenspan’s job. Greenspan’s job was to keep the currency stable, not to keep the Wall Street houses flush with bonus checks. Destroying the dollar was not the trust to which he was appointed. Greenspan was steward of the nation’s currency, and instead he set it on a trajectory into the dirt.

Now we can all suffer because the dollar is declining. Inflation lurks. And inflation destroys capital. Greenspan opened the Pandora’s Box of loose money and false expectations. When people figure it out, I would not want to be Alan Greenspan.

BWK

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