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  • #16
    Re: New Road to Serfdom

    Originally posted by miju View Post
    the US economy is a large debtor and cannot impose its solutions. only the lender can. good luck america !
    miju
    According to Michael Hudson, your position has been proved in error since WWII. His thesis is that the US economy is a large debtor and does indeed impose its solutions on the rest of the world. His observation is that the rest of the world is faced with going along with this or plunging the world into economic collapse. You were saying...?

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    • #17
      Re: New Road to Serfdom

      Originally posted by fogger View Post
      Greenspan understood perfectly. He pursued his self-interest without concern of effect because that is the most moral thing one can do.

      IMO, Greenspan may go down as a saint for singlehandedly accelerating the demise of the world central banking system. Assuming WE are smart enough to learn.
      Alan Greenspan swore to serve in the office of Chairman of the Federal Reserve. Setting aside the (important) question of harm or benefit of central banking, Greenspan was morally bound to pursue the interests integral to his oath of office, not his own interests.

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      • #18
        Re: New Road to Serfdom

        Originally posted by jk View Post
        that's like saying hitler was a saint for giving genocide a bad name.
        Kind of. But that's not a good analogy.

        It doesn't matter though. We've been falling for the scam for a few thousand years. Have we learned yet?


        Alan Greenspan swore to serve in the office of Chairman of the Federal Reserve. Setting aside the (important) question of harm or benefit of central banking, Greenspan was morally bound to pursue the interests integral to his oath of office, not his own interests.
        Every congressman and president since Lincoln swore to uphold the Constitution too.

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        • #19
          Re: New Road to Serfdom

          BTW, I was referring to Ayn Rand's Objectivism. Her philosophy is the pursuit of self interest is the most moral thing one can do; reasoning it is up to others to protect themselves. In essence, your raw pursuit teaches others their weaknesses enabling them to grow up.

          Not saying I agree with it 100%, but she has a point. I'm pretty sure it is Greenspan's guiding principle.

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          • #20
            Re: New Road to Serfdom

            Originally posted by fogger View Post
            BTW, I was referring to Ayn Rand's Objectivism. Her philosophy is the pursuit of self interest is the most moral thing one can do; reasoning it is up to others to protect themselves. In essence, your raw pursuit teaches others their weaknesses enabling them to grow up.

            Not saying I agree with it 100%, but she has a point. I'm pretty sure it is Greenspan's guiding principle.
            I don't think Greasespam is/was/has been even close[edit:at least during his stay at the Fed]. In order to achieve Rand's ideal an individual must be honest--and I don't know how wide the range of interpretation of "honesty" is--but an honest person in the Rand sense does not act in his/her own self-interest at the unfair expense of others.
            Last edited by Jim Nickerson; 01-14-08, 12:18 PM.
            Jim 69 y/o

            "...Texans...the lowest form of white man there is." Robert Duvall, as Al Sieber, in "Geronimo." (see "Location" for examples.)

            Dedicated to the idea that all people deserve a chance for a healthy productive life. B&M Gates Fdn.

            Good judgement comes from experience; experience comes from bad judgement. Unknown.

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            • #21
              Re: New Road to Serfdom

              Originally posted by fogger View Post
              BTW, I was referring to Ayn Rand's Objectivism. Her philosophy is the pursuit of self interest is the most moral thing one can do; reasoning it is up to others to protect themselves. In essence, your raw pursuit teaches others their weaknesses enabling them to grow up.

              Not saying I agree with it 100%, but she has a point. I'm pretty sure it is Greenspan's guiding principle.
              greenspan was indeed in rand's circle for a time. i think he indeed pursued his interest, which was to be lauded as a hero for each of his recurrent bail-outs, without regard for the long-term consequences.

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              • #22
                Re: New Road to Serfdom

                Originally posted by jk View Post
                greenspan was indeed in rand's circle for a time. i think he indeed pursued his interest, which was to be lauded as a hero for each of his recurrent bail-outs, without regard for the long-term consequences.
                I am aware he was a Rand-groupie, but it seems apparent to me from a position outside his brain that if he was ever an adherent to her idealism, he put it aside.
                Jim 69 y/o

                "...Texans...the lowest form of white man there is." Robert Duvall, as Al Sieber, in "Geronimo." (see "Location" for examples.)

                Dedicated to the idea that all people deserve a chance for a healthy productive life. B&M Gates Fdn.

                Good judgement comes from experience; experience comes from bad judgement. Unknown.

                Comment


                • #23
                  Re: New Road to Serfdom

                  Originally posted by Jim Nickerson View Post
                  I am aware he was a Rand-groupie, but it seems apparent to me from a position outside his brain that if he was ever an adherent to her idealism, he put it aside.
                  In an interview I had with Hudson, who had Greenspan on the payroll as a consultant at Chase 40 years ago, he said Greenspan's interpretation of Objectivism was: take whatever you can get away with taking; it's the other guy's job to stop you. If you are working for a bank, then your job is to do well by the bank. From there it was not a big leap to go to: If you are working for the banking system as head of the Fed, then your job is to do well by the banking system, at least by its definition at the time, which meant externalizing risks, resulting in risk pollution and so on.

                  Christianity also has many interpretations. All religions, do. Objectivism was a religion of convenience for Greenspan.

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                  • #24
                    Re: New Road to Serfdom

                    Originally posted by EJ View Post
                    In an interview I had with Hudson, who had Greenspan on the payroll as a consultant at Chase 40 years ago, he said Greenspan's interpretation of Objectivism was: take whatever you can get away with taking; it's the other guy's job to stop you. If you are working for a bank, then your job is to do well by the bank. From there it was not a big leap to go to: If you are working for the banking system as head of the Fed, then your job is to do well by the banking system, at least by its definition at the time, which meant externalizing risks, resulting in risk pollution and so on.

                    Christianity also has many interpretations. All religions, do. Objectivism was a religion of convenience for Greenspan.
                    EJ, I guess we are on the same side of this issue. My point so that there is no lack of clarity, is that anyone who associates Greasespam's behavior while FOMC chairman and the idealism of Ayn Rand is wrong and does a great disservice to what Rand appeared to promote.
                    Jim 69 y/o

                    "...Texans...the lowest form of white man there is." Robert Duvall, as Al Sieber, in "Geronimo." (see "Location" for examples.)

                    Dedicated to the idea that all people deserve a chance for a healthy productive life. B&M Gates Fdn.

                    Good judgement comes from experience; experience comes from bad judgement. Unknown.

                    Comment


                    • #25
                      Re: New Road to Serfdom

                      Originally posted by Jim Nickerson View Post
                      I am aware he was a Rand-groupie, but it seems apparent to me from a position outside his brain that if he was ever an adherent to her idealism, he put it aside.
                      Well here's another opinion on Greenspan. From the UK Telegraph...
                      Anna Schwartz blames Fed for sub-prime crisis

                      Last Updated: 12:47am GMT 14/01/2008

                      Anna Schwartz, the revered economist, shares her views on the credit bubble with Ambrose Evans-Pritchard

                      As rebukes go in the close-knit world of central banking, few hurt as much as the scathing indictment of US Federal Reserve policy by Professor Anna Schwartz.

                      The high priestess of US monetarism - a revered figure at the Fed - says the central bank is itself the chief cause of the credit bubble, and now seems stunned as the consequences of its own actions engulf the financial system. "The new group at the Fed is not equal to the problem that faces it," she says, daring to utter a thought that fellow critics mostly utter sotto voce.

                      "They need to speak frankly to the market and acknowledge how bad the problems are, and acknowledge their own failures in letting this happen. This is what is needed to restore confidence," she told The Sunday Telegraph. "There never would have been a sub-prime mortgage crisis if the Fed had been alert. This is something Alan Greenspan must answer for," she says.

                      Schwartz remains defiantly lucid at 92. She still works every day at the National Bureau of Economic Research in New York, where she has toiled since 1941.

                      Her fame comes from a joint opus with Nobel laureate Milton Friedman: A Monetary History of the United States. It revolutionised thinking on the causes of the Great Depression when published in 1965. The book blamed the Fed for causing the slump. The bank failed to use its full bag of tricks to stop the implosion of the money stock, and turned a bust into calamity by raising rates.

                      "The book was a bombshell," says British monetarist Tim Congdon. "Until then almost everybody thought the free-market system itself had failed in the 1930s. What Friedman-Schwartz say was that incompetent government bureaucrats at the Fed had caused the Depression."

                      "It had an enormous impact in revitalising free-market conservatism, and it broke the Keynesian stranglehold over policy," he says. Keynes himself was a formidable monetarist. He became a "Keynesian" big spender only once all else seemed to fail.
                      The tale of the early 1930s is intricate, but worth rehearsing in the climate of today's credit crunch.

                      The October 1929 crash did not cause the slump, it was merely a vivid detail. The US economy muddled through for another year, seemingly sound. Then it buckled as rising defaults in the farm belt set off a run on local banks.

                      It was at this juncture that critics claim the Fed lost the plot. Washington prohibited the pros at the New York Fed from injecting sufficient stimulus through open market operations [buying bonds].
                      Contagion spread. The Jewish-owned Bank of the United States was allowed to collapse by fellow clearing banks, for reasons of snobbery and malice.

                      The Chicago Fed insisted into the depths of the deflation that inflation still lurked, that there was an "abundance of funds", that speculators had to be punished, and that bad banks should fail. The staggering blindness of Fed backwoodsmen from 1930-1933 is hard to exaggerate.

                      In hindsight, it seems astonishing that the Fed raised the discount rate twice in late 1931 to 3.5 per cent even as global finance was disintegrating. It did so to halt bullion flight and defend the Gold Standard, but it failed to offset the effects with bond purchases. Britain was forced off the Gold Standard in September 1931 after the Atlantic Fleet "mutinied" at Invergordon over 10 per cent pay cuts. That proved a providential crisis - the pound fell. The Bank of England was soon able to slash rates. The slump proved less serious than in the US, and not a single bank collapsed in the British Empire.

                      Schwartz warns against facile comparisons between today's world and the Gold Standard era. "This is nothing like the Depression. I don't really believe the economy as a whole is going to fall apart. Northern Rock has been the only episode of a bank failure so far," she says.

                      Over 4,000 US banks - a fifth - collapsed in the 1930s. There was no deposit insurance. Real economic output fell by a third, prices by a quarter, and unemployment reached a third. Real income fell by 11 per cent, 9 per cent, 18 per cent, and 3 per cent in the years to 1933.

                      According to Schwartz the original sin of the Bernanke-Greenspan Fed was to hold rates at 1 per cent from 2003 to June 2004, long after the dotcom bubble was over. "It is clear that monetary policy was too accommodative. Rates of 1 per cent were bound to encourage all kinds of risky behaviour," says Schwartz.

                      She is scornful of Greenspan's campaign to clear his name by blaming the bubble on an Asian saving glut, which purportedly created stimulus beyond the control of the Fed by driving down global bond rates. "This attempt to exculpate himself is not convincing. The Fed failed to confront something that was evident. It can't be blamed on global events," she says.

                      That mistake is behind us now. The lesson of the 1930s is that swift action is needed once the credit system starts to implode: when banks hoard money, refusing to pass on funds. The Fed must tear up the rule-book. Yet it has been hesitant for three months, relying on lubricants - not shock therapy.

                      "Liquidity doesn't do anything in this situation. It cannot deal with the underlying fear that lots of firms are going bankrupt," she says. Her view is fast spreading. Goldman Sachs issued a full-recession alert on Wednesday, predicting rates of 2.5 per cent by the third quarter. "Ben Bernanke should be making stronger statements and then backing them up with decisive easing," says Jan Hatzius, the bank's US economist.

                      Bernanke did indeed switch tack on Thursday. "We stand ready to take substantive additional action as needed," he says, warning of a "fragile situation". It follows a surge in December unemployment from 4.7 per cent to 5 per cent, the sharpest spike in a quarter century. Inflation fears are subsiding fast.

                      Bernanke insists that the Fed has leant the lesson from the catastrophic errors of the 1930s. At the late Milton Friedman's 90th birthday party, he apologised for the sins of his institutional forefathers. "Yes, we did it, we're very sorry, we won't do it again."
                      Link:
                      http://www.telegraph.co.uk/money/mai...chwartz113.xml

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