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NY Times columnist Krugman: Blindly into the Bubble

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Rourke

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Greenspan, on the other hand, is a self-described Objectivist, who still believes in the Gold Standard. His entry into government economic manipulation, the christening of which was attended by Miss Rand herself, is itself a glaring contradiction. How can someone who believes in the Gold Standard justify being at the helm of the absolute antithesis of that standard? He can't. It is a contradiction. Either he doesn't believe in the Gold Standard, or he doesn't believe in the Fed. Since his actions have exploded the myth of the ability of the Fed to regulate the economy, and since his final adjustments to the levers virtually guaranteed a collapse of the fiat dollar, rejecting the premise of his belief in the Gold Standard leads to another contradiction: How could someone so skilled at studying and understanding complex relationships and causality in the economy (as proven by his track record prior to 2000) have so spectacularly missed the dangers of his course of action in the final five years or so?

When do you think Greenspan might reveal to the world that this was all part of a grand plan to take down the Fed and fiat currency? After all, he's retired now so there really shouldn't be any reason to keep up with the charade.

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When do you think Greenspan might reveal to the world that this was all part of a grand plan to take down the Fed and fiat currency? After all, he's retired now so there really shouldn't be any reason to keep up with the charade.

If Greenspan was doing this intentionally, he would have to hide it, because the looters would argue that he was a capitalist at heart and intentionally sabotaged the economy to promote capitalism. He would have to play it through as long as there was a chance the looters would use the fact as a tool to promote a more idealistic operator of the levers of economics - someone who does not promote the myth of free markets and price signals.

This discussion has two sides to it - the possibility (however remote or far-fetched) that Greenspan is D'Anconia, and the implied critique of Rand's theme in AS. If you were a character in AS, would you have the same attitude towards D'Anconia that you have towards Greenspan? Would you assume that he is confused, and take his actions as a contradiction of words, assuming that his actions reveal his true self while his words are confused rationalization or unprincipled lip-service?

I'm reading AS again and marveling at the precise insight she had into how the economy would unfold, how the government would react, and the companies. We are in a cannibalistic frenzy right now in this economy, every bit as vicious as what Rand described fifty years prior. Just look at the legions of businesses, municipalities, unions, charities, hungrily eying the carcass of our free market for a morsel of free money. Chrysler is offering 0%/60mo financing, courtesy of our expropriated money,l while Ford, who turned down the handouts is struggling, and likely to fail now, not because it can't compete, but because it would not supplicate to the pull peddlers in DC.

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Of course it's a contradiction. Do you know why?
Well, it isn't. And, no, I don't need your explanation of why every whore enjoys what she does. It's not a point I'd choose to argue with you. So, we'll simply have to agree to disagree.
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Well, it isn't. And, no, I don't need your explanation of why every whore enjoys what she does. It's not a point I'd choose to argue with you. So, we'll simply have to agree to disagree.

You didn't say that - you said "does not like her job." The contradiction lies in saying that she doesn't like "her job." A job has two sides: the service a person performs, and what they get in return. No, a whore doesn't necessarily "enjoy" "what she does," but the pay more than makes up for it, so she does "like" her job, otherwise, she'd get a "better" one.

(I guess I should have gotten your definition of "like," since you synonymize it here with "enjoy")

But what's your point? [o.e.:] - I mean, how does whether a whore "likes" her job relate to the discussion? Or are are you drawing a general critique of my definition of "contradiction?"

Edited by agrippa1
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Greenspan acted like a whore for years and years.

In his youth expounded on virtue; but, once he tasted adoration, power & money, all he could manage were some incoherent and unconvincing mumblings that he's being pushed to do acts he really ought not be doing. Then, in retirement he complains that one cannot be virtuous because virtue implies virginity. And, from this, are we to conclude that he is actually a nun in disguise, trying to bring true the scripture in Revelations, by hastening the end of the world? I think not!

I hope the analogy is clearer now.

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...and in doing so, carried out every moral precept of our age. For years he received gratitude and citations of honor. Now he does not understand why he is being damned.
Sure he does. I think he's given enough proof that he's sharp. His flaw was never his intelligence, just his morality.
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Going off the above debate about Greenspan (Green Spawn if you talking to Gordan Liddy) there may not be contradictions but their is confusion and their is human error. A lack of morality on some level could be the culprit here. But I wonder what type of weight was on Greenspans shoulders the entire time? Maybe he just took the easy way out and sold out? Maybe he was trying to accomplish something greater and was clothes-lined by the powers that be?

I don't know a lot about Greenspan. Not as much as I do about the gold standard, monetary policy, banking and the Fed. I haven't read the man's biography yet. The above sentences are about as much speculation as I can get out of myself, without venturing into the realm of making stuff up.

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Sure he does. I think he's given enough proof that he's sharp. His flaw was never his intelligence, just his morality.

Can you name, in concrete terms, his immorality?

Put another way - your premise seems to be that his initial intentions, in becoming an economic planner, were virtuous. But "once he tasted adoration [and] power" he became corrupted, and his immorality led him to destroy the economy. There is a contradiction in that premise.

There is only one manner in which a person with power over a fiat currency can act morally, and that is to destroy the rationale underpinning that currency. Greenspan did, and continues to do, exactly that.

For years he manipulated the Fed with such mastery that he was revered as almost supernaturally insightful, "the Maestro." Through eighteen years, roughly evenly split between the two parties, he was considered almost universally as the best man for the job. Yet even he couldn't see what is now so obvious to most of us: his actions were instrumental in undermining our financial system and setting us up for a collapse.

He handed the reins of power to Bernanke on February 1 2006, at a point when few were expecting even a moderate downturn, and very few had any inkling of what was to come. Yet read Bernanke's resume and you find that Greenspan tapped the person most qualified to deal with a massive economic collapse. Bernanke is a noted expert in the Great Depression and a renowned deflation hawk. He is a man who lectured Milton Friedman, on his 90th Birthday, that, "regarding the Great Depression. You're right, we did it. We're very sorry. But thanks to you, we won't do it again." (that quote might just headline this chapter in future history books) He is a man who prescribed, in 2002, the steps required to avert another Great Depression, including: printing money, lowering interest rates and bond yields, and purchasing private entities. Who better to deal with the massive economic collapse which would occur 18 months after Greenspan relinquished the reins?

Do you believe in coincidences? Well, either Bernanke's selection as Fed chairman a year and a half before the greatest collapse since 1929 was just one hell of a serendipitous coincidence, or...

Bernanke provided Greenspan a detailed playbook of the actions to be taken when the collapse started. Greenspan knew the collapse was coming and picked Bernanke as the indisputably best man to run the rescue, knowing full well that Bernanke's actions would only worsen the situation and exacerbate the collapse. In the aftermath, any suggestion that more state planning be adopted to avert future catastrophes would be met (hopefully) with widespread condemnation. There still would need to be a signal provided of LF Capitalism's ability to right and stabilize the economy. That must occur only when the people have lost all remaining faith in the gov't planning. (According to the proposed plot to this story)

(Edit: errors)

Edited by agrippa1
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Going off the above debate about Greenspan (Green Spawn if you talking to Gordan Liddy) there may not be contradictions but their is confusion and their is human error. A lack of morality on some level could be the culprit here. But I wonder what type of weight was on Greenspans shoulders the entire time? Maybe he just took the easy way out and sold out? Maybe he was trying to accomplish something greater and was clothes-lined by the powers that be?
The Fed an Greenspan were not the sole architects of all the problems that led to the recent collapse of financial institutions. For instance, he did not come up with the idea of Fannie and Freddie. The Fed too often gets more credit and blame for things happening in the economy than it deserves. Many other people in government are to blame. So, the ultimate blame falls on the American voter.

In addition, it is worth pointing out that in an important sense, Greenspan was not an anomaly among Fed governors. Most of what he did was completely in line with the actions of a long line of Fed governors before him. He never "tightened" more than most -- so he was not really doing anything special to keep inflation in check. On the other hand, up to the dot.com bust he was not particularly "loose" either.

The one thing that Greenspan brought to the table was the incorrect perception that he was different and less of a typical Federal bureaucrat who would try to inflate out of any rut. Compare him to Paul Volcker, who ended up with a reputation of being "hawk" who would keep inflation under control, even at the risk of sending interest-rates high. Greenspan -- primarily because of his intellectual background -- was seen to be similarly hawkish, even though he did almost nothing -- after joining government -- to warrant that reputation.

I assume Greenspan had "good" intentions, and thought that a government bureaucrat could engineer a Keynesian prosperity that could endure, if only that bureaucrat was himself. It would be like Galt thinking that if he took the Economic Czar role, he could actually lead the country to wealth, even though he did not change any fundamentals enacted by the rest of the government.

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