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Alan Greenspan has died

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Re: Alan Greenspan has died

#21

Post by derf_ »

bhouston wrote: post #5

I'm not a gold bug but Alan was a proponent of the gold standard. He wrote about how the gold standard created responsible spending and more equality in the world: https://ritholtz.com/2008/11/gold-and-economic-freedom-by-al... The world we are in now, especially in the US, is one where there is near unlimited government credit but it is, according to many, papering over deep structural problems. At some point, these…

> ...it prevented massive unconstrained expansion of credit and that seems sensible.

At the height of the Great Depression (1936), some economists proposed The Chicago Plan to separate the provision of credit from the money supply by eliminating fractional reserve banking, giving better control of the increases and contractions of credit, the elimination of bank runs, and a dramatic reduction in debt. There was a recent (2012) paper from the IMF [1] that seemed to find this actually is pretty sensible, although I do not claim to be smart enough to understand all of the implications.

[1] https://www.imf.org/en/publications/wp/issues/2016/12/31/the...

Re: Alan Greenspan has died

#22

Post by jandrese »

hylaride wrote: post #13
bhouston wrote: post #9

Earlier quoted context omitted.

It was generally 20 years of growth and the 2008 banking crisis actually happened after he left.

Alan Greenspan acquired too much power and went out of his way to railroad regulators. It was a classic "absolute power corrupts absolutely" and his flooding the markets with dollar liquidity at every crisis completely destroyed any concepts of moral hazard, of which we are still living with the consequences to this day. He set the stage for the financial crisis that started crumbling a year after he left the fed cha…

He was a believer in the idea that banks would never act against their own long term interests in order to make money quickly because that would be an existential crisis for the bank.

Shortly after he left a bank with over 150 years of history collapsed due to exactly that sort of mismanagement, triggering a crisis for the entire banking sector.

Re: Alan Greenspan has died

#23

Post by conductr »

brightball wrote: post #17
bhouston wrote: post #5

I'm not a gold bug but Alan was a proponent of the gold standard. He wrote about how the gold standard created responsible spending and more equality in the world: https://ritholtz.com/2008/11/gold-and-economic-freedom-by-al... The world we are in now, especially in the US, is one where there is near unlimited government credit but it is, according to many, papering over deep structural problems. At some point, these…

39 trillion in debt with no Congressional stomach for... - spending cuts - stopping fraud - figuring out how the net worth of people in Congress increases from hundreds of thousands of dollars to 10s or 100s of millions of dollars - addressing wasteful and ineffective programs Given those issues, the only solution will be inflation. The circling the drain moment will hit with the associated welfare programs get a dir…

This ball is already in motion IMO. Inflation numbers aren’t even believable and It’s already not fun.

Re: Alan Greenspan has died

#24

Post by lucius_verus »

fouc wrote: post #7

Mostly I just know Alan Greenspan for being a disciple of Ayn Rand back in the 1950s/60s. Though the Objectivists didn't like his work at the federal reserve. In 2008 he admits to being shocked that banks weren't rationally selfish.

Related article from around that time: https://www.motherjones.com/politics/2008/10/alan-shrugged/

Re: Alan Greenspan has died

#26

Post by close04 »

bhouston wrote: post #11
b40d-48b2-979e wrote: post #10

Earlier quoted context omitted.

And when production for a system I built burns down the month after I leave my job, the next guy they hire was actually the culprit! Greenspan was seen as responsible for the dot-com bust as well which was solidly in the center of his tenure.

I think that this was relatively not known as a major risk far in advance otherwise more traders would have gotten rich. Michael Burry only started to short the market in late 2005, four months before Greenspan's term ended. It is hard to ask Greenspan to have super natural powers of foresight beyond just about everyone else.

> It is hard to ask Greenspan to have super natural powers of foresight beyond just about everyone else.

From a person in his position the baseline is "more foresight than just about everyone else". That's why they get the big bucks.

If you build something grand on wooden legs and massive debt for the next guy to deal with, or drive into a failure mode even if that's not super obvious, it's not high praise.

Re: Alan Greenspan has died

#27

Post by jandrese »

fouc wrote: post #7

Mostly I just know Alan Greenspan for being a disciple of Ayn Rand back in the 1950s/60s. Though the Objectivists didn't like his work at the federal reserve. In 2008 he admits to being shocked that banks weren't rationally selfish.

The libertarian community really thought they had their fox in the hen house when he was put in charge of regulation, and he did a fair bit of deregulation, but not nearly to the extent that they wanted. In the end it was enough to trigger a major financial crisis, but not enough to completely collapse the world economy and return to the feudalism they wanted.

Re: Alan Greenspan has died

#28

Post by bhouston »

brightball wrote: post #17
bhouston wrote: post #5

I'm not a gold bug but Alan was a proponent of the gold standard. He wrote about how the gold standard created responsible spending and more equality in the world: https://ritholtz.com/2008/11/gold-and-economic-freedom-by-al... The world we are in now, especially in the US, is one where there is near unlimited government credit but it is, according to many, papering over deep structural problems. At some point, these…

39 trillion in debt with no Congressional stomach for... - spending cuts - stopping fraud - figuring out how the net worth of people in Congress increases from hundreds of thousands of dollars to 10s or 100s of millions of dollars - addressing wasteful and ineffective programs Given those issues, the only solution will be inflation. The circling the drain moment will hit with the associated welfare programs get a dir…

Also please add as an option: raise taxes on the wealthy individuals and corporations back.

https://inequality.org/article/11-charts-tax-wealthy-corpora...

This is really ambiguous:

"- stopping fraud"

And can mean many things. On the right, it often means Somali daycares, on the left it means the underfunding of the IRS so that it doesn't do audits of rich people.

I find this to be mostly a distraction:

"- figuring out how the net worth of people in Congress increases from hundreds of thousands of dollars to 10s or 100s of millions of dollars"

We should ban stock trading by members of the government, the Ro Khanna bill, but while it can be a source of corruption, it isn't a major source of inequality in the US.

This is unclear, can you be more specific as it has different answers based on one's partisan leanings:

"- addressing wasteful and ineffective programs"

I think a lot of the distortion of US policy towards the rich is a result of Citizens United and similar unrestrained lobbying funds.

Re: Alan Greenspan has died

#29

Post by budsniffer952 »

bhouston wrote: post #5

I'm not a gold bug but Alan was a proponent of the gold standard. He wrote about how the gold standard created responsible spending and more equality in the world: https://ritholtz.com/2008/11/gold-and-economic-freedom-by-al... The world we are in now, especially in the US, is one where there is near unlimited government credit but it is, according to many, papering over deep structural problems. At some point, these…

Tying the ability to increase the money supply to a metal we have to dig out of the ground is ridiculous.

>near unlimited government credit

Really? How do we get some? And, beyond that, what do YOU think the limits should be on increasing the money supply by a sovereign nation?

A nation becomes wealthy by producing things to sell. Nothing else matters, including debt. But, we live in a world where people want to be rich, but also don't want to use resources, or build, or manufacture things, or run an empire. It's contradictory, and we are starting to see the effects.

Re: Alan Greenspan has died

#30

Post by CalRobert »

chollida1 wrote: post #14
b40d-48b2-979e wrote: post #6

Earlier quoted context omitted.

He also oversaw the economy for twenty years before one of the worst recessions in the world. He helped set the stage for multiple disasters with his policies, so I'd take his opinions with a grain of salt.

Really? I don't think anyone really holds him responsible for the dotnet crash of 2000 as that was a market issue and irrational exuberance issue and not a monetary one. And 2008 was similar. The Fed doesn't control or have any responsibility for lower lender standards or ARM mortgages. Congress was responsible for the GSE's that bought any mortgages and wrote insurance on those mortgages, so you can't blame the FED…

There was a dot net crash too??
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