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Alan Greenspan has died

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Re: Alan Greenspan has died

#61

Post by HeyBigE »

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…

You don't think Greenspan had a major hand in the dot com crash? "In late 1999, the Federal Reserve under Greenspan flooded the financial system with unprecedented liquidity to ward off potential deflationary impacts and cash-hoarding caused by the Y2K bug panic. The Fed expanded the money supply at an annualized rate of 22% in the fourth quarter of 1999."

As for the Great Recession, taking the Fed Funds rate from 6.5% to 1.0% and holding it there for a year was the catalyst for driving everyone into the mortgage market looking for returns. And then did not regulate subprime lending or the shadow banking market:

"As the housing market boomed, subprime mortgage originations skyrocketed from 8.2% of all mortgages in 2003 to 23.5% in 2006. The Fed possessed the authority under the Home Ownership and Equity Protection Act (HOEPA) to crack down on predatory lending and loose underwriting standards but chose not to act aggressively."

"The Fed failed to properly monitor off-balance-sheet vehicles, investment bank leverage, and complex derivatives like mortgage-backed securities (MBS) and collateralized debt obligations (CDOs). Because these instruments developed outside traditional commercial banking oversight, a highly leveraged 'shadow banking' system grew completely unchecked under the Fed's watch."

So yeah, the Fed has its fingerprints all over the scene of the crime. Lots of blame to go around though..

Re: Alan Greenspan has died

#62

Post by asveikau »

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.

This phrase was very popular for a good many years, popularized by Greenspan iirc: https://en.wikipedia.org/wiki/Irrational_exuberance

It described the dotcom bubble, but I seem to recall people were applying it to the 2000s housing market too. Tldr it was not a totally uncommon opinion during either of these bubbles to say there was a bubble going on.

Re: Alan Greenspan has died

#63

Post by throw0101d »

lesuorac wrote: post #60
throw0101d wrote: post #15

Earlier quoted context omitted.

> He wrote about how the gold standard created responsible spending and more equality in the world: The Gilded Age, which had quite high levels of inequality, occurred when the gold standard was active: * https://en.wikipedia.org/wiki/Gilded_Age It should also be noted that the gold standard did not bring any kind of price stability: * https://archive.is/https://www.theatlantic.com/business/arch... Further, sticking…

Eh, aren't most of those points non-sequiturs? > The Gilded Age, which had quite high levels of inequality, occurred when the gold standard was active: And the Gilded Age [1] ended long before the gold standard. Which makes sense since the Gilded Age is a political issue not a monetary one; how will the productivity from railroads be redistributed? > It should also be noted that the gold standard did not bring any ki…

The Gilded Age was the 1870-1900, the gold standard was from 1870-1920s. Gold did not help stop inequality, and many progressive elements rallied against it when it was in effect:

* https://en.wikipedia.org/wiki/Cross_of_Gold_speech

> A comparison of 35 years against 4?

* https://en.wikipedia.org/wiki/Great_Moderation

Panics and economic downturns during the Gold Standard period were much more frequency. The term "Great Depression" used to refer to something else besides what happened in the 1930s, and the gold standard was a contributing factor to that as well:

* https://en.wikipedia.org/wiki/Long_Depression

> Take a look at the fed balance sheet [2]; under Kaynsian ideology you were supposed to sell that off during the boom years so you can take on debt during the busts but politicians are not disciplined enough to do that so the Gold Standard would've never let them.

On the Gold Standard the flexibility of emergency spending during bad years would not be possible: see 1930-1932, and then again in 1937–1938 when FDR tried to go back to balanced budgets through austerity.

* https://en.wikipedia.org/wiki/Recession_of_1937–1938

The politicians that tend to talk about "hard money" and responsible spending are the GOP—but who only seem to talk about it when a Democrat is in the White House. When their guy is in then it's all tax cuts, which do not pay for themselves:

* https://en.wikipedia.org/wiki/Kansas_experiment

and spending (see >$1T Pentagon budget(s)). They're mostly trying to roll back the New Deal (and later Great Society) and cut social programs:

* https://en.wikipedia.org/wiki/Starve_the_beast

Re: Alan Greenspan has died

#64

Post by pfdietz »

greenavocado wrote: post #55
throw0101d wrote: post #15

Earlier quoted context omitted.

> He wrote about how the gold standard created responsible spending and more equality in the world: The Gilded Age, which had quite high levels of inequality, occurred when the gold standard was active: * https://en.wikipedia.org/wiki/Gilded_Age It should also be noted that the gold standard did not bring any kind of price stability: * https://archive.is/https://www.theatlantic.com/business/arch... Further, sticking…

The Great Depression was caused by France panic hoarding gold https://www.nber.org/papers/w16350 Semi-ironically France was the reason the US fell off the dollar standard after it panic hoarded gold AGAIN when the French government made one last, massive purchase of gold from the US using US dollars, paying $35/oz. A French warship arrived in New York in early August 1971 to load the gold and bring it back to France.…

And then later in the 1930s as world gold flowed into the US (in response to the rise of the Axis) the economy began to recover here. By the end of the war most gold was in the US.

Re: Alan Greenspan has died

#65

Post by margalabargala »

bko wrote: post #39
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…

I have come around to gold. Money shouldn't be dual purposes, we should apply single responsibility principal. Money should refer to some stable (albeit slightly growing by nature) account of measure. Prices should get cheaper. That's a progress dividend. We get better at growing food every year, why shouldn't food get cheaper? Imagine a world in which prices regularly go down. You're a passive beneficiary of technol…

> Imagine a world in which prices regularly go down

That world results in a lot of people individually deciding "why buy now, when I can buy for less later" and sitting on their money.

That in aggregate makes the economy much worse.

You're up against human nature here. Money may be an arbitrary numerical denomination of value, but people's behavior around it and how that affects the economy at large need to be accounted for. Having prices slowly creep upwards over time (low inflation) tends to result in more, better things sooner.

Re: Alan Greenspan has died

#66

Post by conductr »

byronic wrote: post #50
conductr wrote: post #42

Earlier quoted context omitted.

There was a stimulus check that went out around that time. I felt it insane that I was receiving a check when nobody in my life was negatively impacted, the economy didn’t seem hurt (no more then when you’re up then down at a blackjack table), it was just a rebalancing of people’s portfolios values. Turns out that started the wave of completely untargeted stimulus/aide that would come at every economic faltering. I w…

TLDR - Why make it harder for people to get help on the basis that some people might get help who don't deserve it? means testing kills the usefulness of these kinds of stimuli. I completely disagree with your point here and the people buying Gucci/LV are a drop in the bucket compared to, say, Wal-Mart's yearly wage theft statistics. There is no simple means of identifying who is in need and if people get the help wh…

There’s no need to make it difficult. All you have to do is publish sensible guardrails and force people to apply for assistance and it would shrink the public cost substantially.

I have homeowners insurance, but if my home burns down today I won’t have any reasonable assistance deposited this week. There’s a claim process and I need to have an emergency fund to get my immediate needs met.

Everyone should care. The national debt and eventually the nation will crumble based on these decisions to just print massive amounts of money with no real need.

I didn’t qualify for any stimulus after that one in 2001 so they are filtering it down and putting up some guardrails. They just need to give this some intent and pre thought. You can claim it’s too difficult when you didn’t even try to have a plan or come up with something that was actually going to good use to assist those in need.

Another way to think about it, if Covid was more severe than it was, we’d have wanted those payments to continue for twice or more longer to those in need. But if we were tapped out and had to stop them early, then those in need ultimately succumb to whatever and all the money was spent in vain.

I personally believe we shouldn’t socialize every blip. We are just perpetuating this “who cares” mentality and a welfare mentality. Why even have savings or an emergency fund, the government should step in at every turn. It’s a ridiculous stance in my view.

Re: Alan Greenspan has died

#67

Post by triceratops »

bko wrote: post #39
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…

I have come around to gold. Money shouldn't be dual purposes, we should apply single responsibility principal. Money should refer to some stable (albeit slightly growing by nature) account of measure. Prices should get cheaper. That's a progress dividend. We get better at growing food every year, why shouldn't food get cheaper? Imagine a world in which prices regularly go down. You're a passive beneficiary of technol…

> We get better at growing food every year, why shouldn't food get cheaper?

It has gotten cheaper, as a percentage of people's income and spending.

Re: Alan Greenspan has died

#68

Post by sporadicism »

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…

> Can you flesh out how you feel Greenspan is responsible for 2008?

Greenspan felt Greenspan was responsible for 2008.

https://www.nytimes.com/2008/10/24/business/economy/24panel....

Re: Alan Greenspan has died

#69

Post by Noaidi »

throw0101d wrote: post #63
lesuorac wrote: post #60

Earlier quoted context omitted.

Eh, aren't most of those points non-sequiturs? > The Gilded Age, which had quite high levels of inequality, occurred when the gold standard was active: And the Gilded Age [1] ended long before the gold standard. Which makes sense since the Gilded Age is a political issue not a monetary one; how will the productivity from railroads be redistributed? > It should also be noted that the gold standard did not bring any ki…

The Gilded Age was the 1870-1900, the gold standard was from 1870-1920s. Gold did not help stop inequality, and many progressive elements rallied against it when it was in effect: * https://en.wikipedia.org/wiki/Cross_of_Gold_speech > A comparison of 35 years against 4? * https://en.wikipedia.org/wiki/Great_Moderation Panics and economic downturns during the Gold Standard period were much more frequency. The term "Gr…

> the gold standard was from 1870-1920s.

The U.S. officially left the gold standard on August 15, 1971.

https://blog.swissamerica.com/glossary/gold-standard/

> many progressive elements rallied against it when it was in effect:

Bryan wanted a gold and silver standard, not fiat currency. There was also the Greenback-Labor Party who wanted to get off both gold and silver standard. They favored inflation because the gold and silver backed currencies were causing deflation.

You seem to be cherry picking in hopes that people do not know the history of the time.

Re: Alan Greenspan has died

#70

Post by tsimionescu »

conductr wrote: post #66
byronic wrote: post #50

Earlier quoted context omitted.

TLDR - Why make it harder for people to get help on the basis that some people might get help who don't deserve it? means testing kills the usefulness of these kinds of stimuli. I completely disagree with your point here and the people buying Gucci/LV are a drop in the bucket compared to, say, Wal-Mart's yearly wage theft statistics. There is no simple means of identifying who is in need and if people get the help wh…

There’s no need to make it difficult. All you have to do is publish sensible guardrails and force people to apply for assistance and it would shrink the public cost substantially. I have homeowners insurance, but if my home burns down today I won’t have any reasonable assistance deposited this week. There’s a claim process and I need to have an emergency fund to get my immediate needs met. Everyone should care. The n…

> All you have to do is publish sensible guardrails and force people to apply for assistance and it would shrink the public cost substantially.

On the contrary, all public experience shows the opposite. The administrative costs of actually checking if only the right people are receiving a benefit very quickly start out weighing the cost of just paying everyone - especially if you don't want to make the process very onerous for the people who need it (and thus ensure that many who are entitled will not actually be able to receive this).

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