Alan Greenspan, who played a leading role in four decades of transitions, has himself transitioned. He died on Monday at 100 years old, after a career in which he was in the forefront of the neoliberal revolution which inaugurated forty years of boom-bust cycles, which threaten to unleash a new devastating global implosion today.
After meeting Ayn Rand in the 1950s, he became an advocate of the gold standard, writing an essay in 1966, “Gold and Economic Freedom,” in which he asserted that “In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value.” Five years later, on August 15, 1971, when President Nixon was induced to scuttle the Bretton Woods System, with its gold reserve policy, Greenspan shifted his view to embrace monetarism as his economic safety zone.
He was named the Chairman of the Council of Economic Advisers in 1974, from which perch he advocated interest rate targeting and deflationary austerity policies, to address inflation. He became a leading spokesman for free market dogma, fitting in with the “Big Bang” Thatcherite agenda of combining austerity, budget and tax cuts, with privatization and deregulation, which produced the boom-bust cycle of the last forty years. Cheap credit and relaxed regulations fueled the speculative boom, while bailouts were extended to the speculators when the inevitable busts hit, contracting the physical, productive economy which was starved for credit.
The transition to the boom-bust cycle included changes in tax and regulatory policies which favored the Milken era Merger&Acquisition/Leveraged Buyout fever, which transitioned to “financial innovation” swindles including securitization, Collateralized Debt Obligations (CDOs) and an explosion of derivatives trading—all of which Greenspan praised as signs of increasing democracy and openness of financial markets. The results of these changes has been at times catastrophic, as was the October 19, 1987 stock market crash, forecast with great precision by Lyndon LaRouche; the 1997 Asia crisis, and the 1998 Long-Term Capital Management collapse of the Russian bond market; the popping of the 2000 dot-com bubble; and the near-melt-down of the financial system due to the blow-out of the Mortgage-Backed Securities market, fed by the repeal of Glass Steagall, also forecast accurately by LaRouche.
Throughout this period, Greenspan was a leading proponent of getting rid of FDR’s Glass Steagall banking regulation, which Greenspan’s allies in the Congress chipped away bit-by-bit, until it was fully repealed in 1999.
Greenspan’s idiocy was visible to anyone who understood economic science. For example, take his musings about the nature of financial bubbles. A believer in the Adam Smith derived theory of Efficient Market Hypothesis, Greenspan famously pronounced that it is hard to know the difference between an asset bubble, and physically-supported economic growth. In a speech in 1999, he asked how we know “when ‘irrational exuberance’ has unduly escalated asset bubbles?” LaRouche, who sometimes referred to him as “Bubbles Greenspan,” stated that Greenspan’s record proves that he clearly did not know.
His often obtuse verbal utterances and ramblings convinced people that he was some kind of genius, and that it was necessary to have his “Greenspanese” pronouncements translated into English.
Unfortunately, the damage he did over his career, along with his fellow City of London operatives such as Henry Kissinger and Paul Volcker, continues to threaten to unleash an economic collapse which could radically reduce global population, as Kissinger openly advocated. It were good for humanity if his economic theories were interred with his bones.
