Greenspan's Intellectual Dishonesty Have No Limit It Seems
He now claims that he had nothing to do with either the tech stock bubble or the housing bubble. His argument are really pathetic.
He argues that the real source was "the collapse of Communism in eastern Europe and the shift towards more market-based economies in China and other parts of the developing world brought “billions of cheap labourers onto the scene”.
This, he said, “brought disinflation and lowered inflation risk premiums and long-term interest rates, creating a decline in real interest rates and equity-risk premiums.”"
But downward pressure on goods prices from the introduction of cheap laborers won't lower real interest rates, only nominal interest rates. What lowered real interest rates was Fed inflating in response to the price lowering effects of globalization.
Greenspan further argues that the experience of the Fed tightenings in 1994 shows that the Fed can't "stop"(i.e. abstain from creating) a bubble:
“We learned that the Fed could not incrementally diffuse a bubble,”
“We didn’t diffuse the bubble, we made it worse,” he said. “The stock market was flat during the tightening period and when the tightening ended in 1995 the stock market took off.”
Come again? Because the bubble took off after the end of tightenings ended this proves that tightenings are powerless against bubbles? The argument that A prevents B is disproven because after A is removed B appears?
Given Greenspan's proven mastery of economic logic we can only conclude that this fuzzy backward logic again illustrates that he is so desperate to save his reputation that he'll use whatever lie and fraudulent argument he can find.