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Interesting guest essay at C.H. Smith's site.
http://www.oftwominds.com/blogfeb11/EricA2-11.html
Excerpt
Greenspan said in 1966 and afterwards that he wished he could be Fed Chairman when the winter began to stop it from happening. He had to hold the chair well beyond retirement to the age of 75, but he finally got his chance. In 2001, he used every policy measure in the Fed’s arsenal to prevent Kondratiev's winter. He quickly slashed interest rates to 1%, but more than that, he used his position as key bank regulator and adviser to Congress to allow and encourage lending standards to deteriorate to the point where it was common for homeless men to buy multiple houses with no money down. http://thehousingbubbleblog.com/?p=465
Now THAT’S what I call stimulus. That’s not spiking the punchbowl, that’s piping the room with crystal meth.
And it worked! The revelers did not go home! They partied for another seven years, proving the Federal Reserve and Federal Government had the power to hold back winter; and like King Kanute, to command the tide to come ashore no more!
Greenspan was vindicated; showing the Central powers, the insider billionaires their power over reality was truly unlimited! This was popularized in a quote at the same time, commonly attributed to Karl Rove:
“guys like me [are] "in what we call the reality-based community," which he defined as people who "believe that solutions emerge from your judicious study of discernible reality." ... "That's not the way the world really works anymore," he continued. "We're an empire now, and when we act, we create our own reality. And while you're studying that reality—judiciously, as you will—we'll act again, creating other new realities, which you can study too, and that's how things will sort out. We're history's actors…and you, all of you, will be left to just study what we do."[2] http://en.wikipedia.org/wiki/Reality-based_community --NY Times
They had done it! They were smarter, stronger, better than all the kings and emperors who had ever gone before. By controlling perception, http://en.wikipedia.org/wiki/Edward_Bernays through psychological control and propaganda, they now controlled reality itself!
…Until 2005, that is. By then, cracks in the housing bubble were already showing. Although the new Masters of the Universe DID control perception and use the media to re-create history, they neglected to re-construct one other thing: the laws of mathematics. Without increasing incomes, it was mathematically impossible for asset prices such as housing to rise, just as it was mathematically impossible for ever-increasing debt to be serviced, much less repaid. Keynesianism was now officially dead, as the largest stimulus the world had ever known remained helpless before the simple power of mathematical law.
Seeing this, Greenspan began a hasty search for a suitable replacement, as all the other Greenspan-era Fed Governors demurred and quickly retired. It was difficult to find someone who still believed in Keynes and yet couldn’t see it coming, but in 2006 Greenspan retired, Bernanke was installed, and predictably in 2007, the housing market imploded anyway, and with it the stock market, the financial sector, and the economy itself. Although on Greenspan’s advice Congress had doubled the national debt from $6 to $12 Trillion, and the Greenspan-led public doubled their per-capita debt from $30,000 to $55,000 in 4 years, bankrupting the nation—yet the predicted Kondratiev winter was delayed by only 6 years:
http://www.oftwominds.com/blogfeb11/EricA2-11.html
Excerpt
Greenspan said in 1966 and afterwards that he wished he could be Fed Chairman when the winter began to stop it from happening. He had to hold the chair well beyond retirement to the age of 75, but he finally got his chance. In 2001, he used every policy measure in the Fed’s arsenal to prevent Kondratiev's winter. He quickly slashed interest rates to 1%, but more than that, he used his position as key bank regulator and adviser to Congress to allow and encourage lending standards to deteriorate to the point where it was common for homeless men to buy multiple houses with no money down. http://thehousingbubbleblog.com/?p=465
Now THAT’S what I call stimulus. That’s not spiking the punchbowl, that’s piping the room with crystal meth.
And it worked! The revelers did not go home! They partied for another seven years, proving the Federal Reserve and Federal Government had the power to hold back winter; and like King Kanute, to command the tide to come ashore no more!
Greenspan was vindicated; showing the Central powers, the insider billionaires their power over reality was truly unlimited! This was popularized in a quote at the same time, commonly attributed to Karl Rove:
“guys like me [are] "in what we call the reality-based community," which he defined as people who "believe that solutions emerge from your judicious study of discernible reality." ... "That's not the way the world really works anymore," he continued. "We're an empire now, and when we act, we create our own reality. And while you're studying that reality—judiciously, as you will—we'll act again, creating other new realities, which you can study too, and that's how things will sort out. We're history's actors…and you, all of you, will be left to just study what we do."[2] http://en.wikipedia.org/wiki/Reality-based_community --NY Times
They had done it! They were smarter, stronger, better than all the kings and emperors who had ever gone before. By controlling perception, http://en.wikipedia.org/wiki/Edward_Bernays through psychological control and propaganda, they now controlled reality itself!
…Until 2005, that is. By then, cracks in the housing bubble were already showing. Although the new Masters of the Universe DID control perception and use the media to re-create history, they neglected to re-construct one other thing: the laws of mathematics. Without increasing incomes, it was mathematically impossible for asset prices such as housing to rise, just as it was mathematically impossible for ever-increasing debt to be serviced, much less repaid. Keynesianism was now officially dead, as the largest stimulus the world had ever known remained helpless before the simple power of mathematical law.
Seeing this, Greenspan began a hasty search for a suitable replacement, as all the other Greenspan-era Fed Governors demurred and quickly retired. It was difficult to find someone who still believed in Keynes and yet couldn’t see it coming, but in 2006 Greenspan retired, Bernanke was installed, and predictably in 2007, the housing market imploded anyway, and with it the stock market, the financial sector, and the economy itself. Although on Greenspan’s advice Congress had doubled the national debt from $6 to $12 Trillion, and the Greenspan-led public doubled their per-capita debt from $30,000 to $55,000 in 4 years, bankrupting the nation—yet the predicted Kondratiev winter was delayed by only 6 years:
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