Answering the Arguments of a Greenspan-Fan
I have received more e-mail than usual after my article on the mess that Greenspan created and virtually all have been positive, apart from a few which pointed out a typo which initally appeared. Jeffrey Tucker at the Mises Institute however forwarded a e-mail where someone called Paul Nathan attacks the article. Apparently he is to much of a coward to post it on the article's blog entry or on my blog entry below or even to e-mail it directly to me. Yet I shall still reply to his arguments as I believe this increases people's understanding of the issue. Here is what he wrote-and my replies:
>Subject: Re: Response to Greenspans Legacy
>
>on 12/27/05 2:02 PM, Paulnathan2000@aol.com at Paulnathan2000@aol.com wrote:
>
>It is very disappointing to read an article in the name of Ludwig Von
>Misses, that so corrupts the truth. If you read the article you have to
>notice that most of it is opinion.
Oh really. Well, I guess I didn't provide any facts apart from far more statistics than most mises.org articles, theoretical reasoning about the moral hazard created by Greenspan's rescue operation (economic truths are facts, not opinions), Greenspan's background as a Randian gold standard advocate and his role in promoting the rescue operations and the "New Economy" nonsense.
The few facts offered, are twisted to
>make the Authors point. For example he criticizes Greenspan for increasing
>the money supply by rates that he virtually cut in half during his term in
>office.
No he didn't. While money supply growth was below the peaks of the 1970s and early 1980s, it was higher (both the average of Greenspan's whole term and during the latest year) than during Paul Volcker's last year.
Moreover, it is hardly clear that Greenspan deserves credit for holding money supply growth lower than in the 1970s. Sometimes central bankers try to inflate yet fail because the public isn't willing to borrow more. A good example is Japan which have had price deflation and only modest money supply growth for the latest decade despite the fact that the Bank of Japan have tried hard to inflate by reducing nominal short-term interest rates to zero and by rapidly expanding the monetary base. But as bank lending have fallen because the Japanese public have been unwilling to borrow, money supply growth have been modest.
And we can see how Greenspan have done his best to inflate by holding down interest rates far below the natural level and increasing the monetary base even faster than total money supply.
>It is my opinion that anyone that cuts money supply growth, as does anyone
>who cuts taxes, is adding to the freedom of individuals -- but not this guy.
>He simply wants to make a point: That because Greenspan did not take us to
>a Gold Standard he is evil. The fact that it is impossible for Greenspan to
>impose a Gold Standard on this country is evidently irrelevant to the
>writer.
Hu? Yes, Greenspan could hardly have single-handedly given us the gold standard. But he most definetly could have once -at least just once- publicly during the latest 18 years publicly proclaimed that his institution, the Fed, should be abolished and replaced with a gold standard. He could have proclaimed the evils of monetary inflation and that he can and will do everything he can to halt monetary inflation. In short, he could have repeated the arguments he made in 1966 and he could have voted against inflation on the Fed board. But he didn't. In fact, as I point out he was often
a leading advocate of dicretionary Fed board actions for more inflation.
Then there's this:
>
>"When Congressman Ron Paul reminded Greenspan of "Gold and Economic
>Freedom," Greenspan said he now realizes he had been wrong, and that as Fed
>Chairman he was able to pursue policies that mimic the gold standard."
>This is totally false. Greenspan never said he was wrong about his past
>writings, on the contrary, he said that he recently re-read his writings on
>gold, and was surprised that there was nothing he would change, today. He
>is also on the record many times as saying that he favors a Gold Standard,
>and wished more of his peers, agreed. He usually goes out of his way to
>cite the Gold Standard in his writings. Now who is the "dishonest one"?
Didn't this guy read the link to Ron Paul's LRC-article that I had in my article? There Ron Paul writes:
http://www.lewrockwell.com/paul/paul236.html
" In short, he claimed he was wrong about his predictions of calamity for the fiat U.S. dollar, that the Federal Reserve does a good job of essentially mimicking a gold standard, and that inflation is well under control. He even made the preposterous assertion that the Fed does not facilitate government expansion and deficit spending. In other words, he utterly repudiated the arguments he made 40 years ago. "
The fact that Greenspan in another conversation with Ron Paul claim to still believe in the gold standard even as he pursues inflationist policies hardly makes him less of a liar and a fraud.
>"Alan Greenspan has a record of repeated rescue operations during times of
>financial distress. From the stock market crash of 1987(if the market
>crashed how did he rescue it?) to the S&L crisis of the early 1990's (that
>was in the 80's under volker) to the Asian crisis and the collapse of
>LTCM...(this one really gets me. Greenspan brought the parties involved
>together at long term capital, and sat them down in one room and explained
>to them why it was to their interest to put up capital to refinance ltcm's
>bad loans. Not one penny of Government money was used as a bail out.
>Greenspan is the only Government official I know of to use a voluntary
>approach to a crisis.) to the feared Y2K crisis to the bursting of the tech
>stock bubble, Greenspan has proven himself more than willing to bail out
>failed investors (tell that to all the investors that lost fortunes in the
>tech crash) with additional doses of "liquidity" (the popular inflationist
>euphemism for inflation). (What a terrible misrepresentation!)
Hu? Government created fiat money is a "voluntary method"? Puh-lease.......
And this guys considers himself a misesian? Only in cloud-cooko land.
>Fortunately, the world thinks, much better of Alan Greenspan, and his legacy
>will be to have governed during the most prosperous and stable times in the
>history of the United States. He will be remembered for lowering inflation
>rates, and hence, interest rates to the lowest level in modern times. While
>his detractors will continue to wait for the collapse of the monetary
>system, the system he helped improve will serve us well for years to come.
He seem to have missed all of the statistics I provided about the imbalances created by Greenspan I provided.
>I know nothing about the man that wrote this terrible article, but I do know
>something about Walter Williams. He is one of the most outspoken advocates
>of Capitalism, and say's he thinks Alan Greenspan has done an excellent job.
>Williams is also a Missian Economist.
Walter Williams is a misesian economist? That's news to me. He can arguably be refered to as broadly pro-free market and pro-capitalist, but misesian? I've never read him argue for ABCT or any other distinctly misesian theories. And I think the mere fact that he thinks Greenspan have done a great job disqualifies him from being considered a misesian.
>Subject: Re: Response to Greenspans Legacy
>
>on 12/27/05 2:02 PM, Paulnathan2000@aol.com at Paulnathan2000@aol.com wrote:
>
>It is very disappointing to read an article in the name of Ludwig Von
>Misses, that so corrupts the truth. If you read the article you have to
>notice that most of it is opinion.
Oh really. Well, I guess I didn't provide any facts apart from far more statistics than most mises.org articles, theoretical reasoning about the moral hazard created by Greenspan's rescue operation (economic truths are facts, not opinions), Greenspan's background as a Randian gold standard advocate and his role in promoting the rescue operations and the "New Economy" nonsense.
The few facts offered, are twisted to
>make the Authors point. For example he criticizes Greenspan for increasing
>the money supply by rates that he virtually cut in half during his term in
>office.
No he didn't. While money supply growth was below the peaks of the 1970s and early 1980s, it was higher (both the average of Greenspan's whole term and during the latest year) than during Paul Volcker's last year.
Moreover, it is hardly clear that Greenspan deserves credit for holding money supply growth lower than in the 1970s. Sometimes central bankers try to inflate yet fail because the public isn't willing to borrow more. A good example is Japan which have had price deflation and only modest money supply growth for the latest decade despite the fact that the Bank of Japan have tried hard to inflate by reducing nominal short-term interest rates to zero and by rapidly expanding the monetary base. But as bank lending have fallen because the Japanese public have been unwilling to borrow, money supply growth have been modest.
And we can see how Greenspan have done his best to inflate by holding down interest rates far below the natural level and increasing the monetary base even faster than total money supply.
>It is my opinion that anyone that cuts money supply growth, as does anyone
>who cuts taxes, is adding to the freedom of individuals -- but not this guy.
>He simply wants to make a point: That because Greenspan did not take us to
>a Gold Standard he is evil. The fact that it is impossible for Greenspan to
>impose a Gold Standard on this country is evidently irrelevant to the
>writer.
Hu? Yes, Greenspan could hardly have single-handedly given us the gold standard. But he most definetly could have once -at least just once- publicly during the latest 18 years publicly proclaimed that his institution, the Fed, should be abolished and replaced with a gold standard. He could have proclaimed the evils of monetary inflation and that he can and will do everything he can to halt monetary inflation. In short, he could have repeated the arguments he made in 1966 and he could have voted against inflation on the Fed board. But he didn't. In fact, as I point out he was often
a leading advocate of dicretionary Fed board actions for more inflation.
Then there's this:
>
>"When Congressman Ron Paul reminded Greenspan of "Gold and Economic
>Freedom," Greenspan said he now realizes he had been wrong, and that as Fed
>Chairman he was able to pursue policies that mimic the gold standard."
>This is totally false. Greenspan never said he was wrong about his past
>writings, on the contrary, he said that he recently re-read his writings on
>gold, and was surprised that there was nothing he would change, today. He
>is also on the record many times as saying that he favors a Gold Standard,
>and wished more of his peers, agreed. He usually goes out of his way to
>cite the Gold Standard in his writings. Now who is the "dishonest one"?
Didn't this guy read the link to Ron Paul's LRC-article that I had in my article? There Ron Paul writes:
http://www.lewrockwell.com/paul/paul236.html
" In short, he claimed he was wrong about his predictions of calamity for the fiat U.S. dollar, that the Federal Reserve does a good job of essentially mimicking a gold standard, and that inflation is well under control. He even made the preposterous assertion that the Fed does not facilitate government expansion and deficit spending. In other words, he utterly repudiated the arguments he made 40 years ago. "
The fact that Greenspan in another conversation with Ron Paul claim to still believe in the gold standard even as he pursues inflationist policies hardly makes him less of a liar and a fraud.
>"Alan Greenspan has a record of repeated rescue operations during times of
>financial distress. From the stock market crash of 1987(if the market
>crashed how did he rescue it?) to the S&L crisis of the early 1990's (that
>was in the 80's under volker) to the Asian crisis and the collapse of
>LTCM...(this one really gets me. Greenspan brought the parties involved
>together at long term capital, and sat them down in one room and explained
>to them why it was to their interest to put up capital to refinance ltcm's
>bad loans. Not one penny of Government money was used as a bail out.
>Greenspan is the only Government official I know of to use a voluntary
>approach to a crisis.) to the feared Y2K crisis to the bursting of the tech
>stock bubble, Greenspan has proven himself more than willing to bail out
>failed investors (tell that to all the investors that lost fortunes in the
>tech crash) with additional doses of "liquidity" (the popular inflationist
>euphemism for inflation). (What a terrible misrepresentation!)
Hu? Government created fiat money is a "voluntary method"? Puh-lease.......
And this guys considers himself a misesian? Only in cloud-cooko land.
>Fortunately, the world thinks, much better of Alan Greenspan, and his legacy
>will be to have governed during the most prosperous and stable times in the
>history of the United States. He will be remembered for lowering inflation
>rates, and hence, interest rates to the lowest level in modern times. While
>his detractors will continue to wait for the collapse of the monetary
>system, the system he helped improve will serve us well for years to come.
He seem to have missed all of the statistics I provided about the imbalances created by Greenspan I provided.
>I know nothing about the man that wrote this terrible article, but I do know
>something about Walter Williams. He is one of the most outspoken advocates
>of Capitalism, and say's he thinks Alan Greenspan has done an excellent job.
>Williams is also a Missian Economist.
Walter Williams is a misesian economist? That's news to me. He can arguably be refered to as broadly pro-free market and pro-capitalist, but misesian? I've never read him argue for ABCT or any other distinctly misesian theories. And I think the mere fact that he thinks Greenspan have done a great job disqualifies him from being considered a misesian.
posted by stefankarlsson at 5:45 PM
1 Comments:
This irrational belief in the sanctity of Greenspan never ceases to amaze me. No doubt when Bernanke is in the hot seat when all those inflationary Greenspan dollars come home to roost, to cause a US bust, it will be Bernanke who gets the blame for being in the chair when the music stops. There'll probably be calls for Greenspan to be called out of retirement to sort out the mess created by Bernanke! :-)
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