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Greenspan

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  • Wed, Mar 11, 2009 - 10:13pm

    #1
    malpert

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    Greenspan

Today Alan Greenspan published an Op Ed piece in the WSJ:

http://online.wsj.com/article/SB123672965066989281.html

His primary argument is as follows:

The housing bubble was caused by the speculative euphoria of low long term rates. 

The Fed controls short-term interest rates

The Fed does not control long-term rates

The Fed is not responsible for the housing bubble

 

Where to begin? 

Greenspan ignores that the Home Equity ATM bubble was driven by short term rates (Prime rate =  Fed funds + 300 bps).  This cannot be overlooked.  Many of our imported toys were purchased this way and recycled back into long term treasury and agency debt. 

Greenspan ignores that PRINTING MONEY (in exchange for short T-bills) affects all rates not just the target rate.  The freshly printed bank reserves are ultimately converted into long-term bank investments (and multiplied via fractional reserve banking).  Banks make long term loanss…that’s what they do when you give them money.  The more money they have, the lower the long-term rates will be.

Greenspan also ignores that long term rates incorporate expectations for the embedded short-term periods over their duration.  "Easy Money" expectations for the future keep long term rates low (if inflation expectations are kept  in check)

Most importantly Greenspan ignores that TODAY the Fed does have control over long-term rates and just about anything and everything else.  His continuing plea of impotence should be recognized as entirely fallacious.  Yes, the emergency and exigent circumstances have given additional powers to the federal reserve, but it is evident that the wielding of this authority is at the discretion of the Fed itself. 

Greenspan CHOSE not to fight bubbles.  He said didn’t have the tools.  He did.  He likely feared that his seemingly infallible legacy couldn’t affford a  healthy and entirely necessary correction.  Or better yet, he perhaps believed that the beneifts of productivity and globalization were so far ahead of the market that an ongoing expansion was actually possible.  In either case, whether it be arrogance or ignorance, he was wrong.  Today, he is just grabbing at straws trying to convince everyone otherwise.     

 

 

 

 

 

 

 

  • Wed, Mar 11, 2009 - 11:26pm

    #2
    Peak Prosperity Admin

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    Re: Greenspan

 

[Ed. note:  Removed by moderator due to suggestion of violence directed toward Chmn. Greenspan]

  • Thu, Mar 12, 2009 - 12:13am

    #3
    Peak Prosperity Admin

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    Re: Greenspan

Greenspan should be next to maddoff.  Central banking / central planning is what Karl Marx endorsed.  Hang the SpanMan
  • Thu, Mar 12, 2009 - 01:02am

    #4
    Peak Prosperity Admin

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    Re: Greenspan

Allen Greenspan when asked about the relationship of The Federal Reserve and the President 


Scary stuff!  Greenspan says no one is over the Federal Reserve, not even the President.  The Federal Reserve is above our government and it is run by international crooks.

http://www.youtube.com/watch?v=3QkmLnNEvdU&feature=related

  • Thu, Mar 12, 2009 - 03:56am

    #5
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    Re: Greenspan

[quote=DrKrbyLuv]

Allen Greenspan when asked about the relationship of The Federal Reserve and the President 


Scary stuff!  Greenspan says no one is over the Federal Reserve, not even the President.  The Federal Reserve is above our government and it is run by international crooks.

http://www.youtube.com/watch?v=3QkmLnNEvdU&feature=related

[/quote]

No… the Fed is not "above" our government… it IS our government!!!!  These crooks need to be hanged.

  • Thu, Mar 12, 2009 - 05:35am

    #6
    Peak Prosperity Admin

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    Re: Greenspan

violence ………………from moi?

for the guy who trashed the economy of the entire planet 

why perish the thought. 

i think he ought to get a medal.

at least i did not suggest he get hung as someone else here suggested. 

  • Thu, Mar 12, 2009 - 06:15am

    #7
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    Re: Greenspan

[quote=joe2baba]

violence ………………from moi?

for the guy who trashed the economy of the entire planet 

why perish the thought. 

i think he ought to get a medal.

at least i did not suggest he get hung as someone else here suggested. 

[/quote]

They have and will do more destruction than most people on death row have ever done.  I’m all for capital punishment; just apply it to the right people.

  • Thu, Mar 12, 2009 - 06:58am

    #8
    Peak Prosperity Admin

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    Re: Greenspan

 

caroline &/or DrKrby – I’m confused – What do you propose as a replacement for the Fed?
"Hanging the crooks" or "end the fed" does not help me to understand what would be a better alternative.

btw, My objective is NOT to get into an argument but rather to learn something…and maybe hear and offer a different perspective. 

God knows, there are some incredibly wise people on these threads and I certainly
appreciate them sharing their thoughts and wisdom. 

I can not claim to be an expert on the Fed, nor its workings. I can’t say that its rules are fair nor unfair – but, most importantly, they are known.  And as long as the rules are known, then we all have the opportunity to ‘play by the rules’. 
If someone understands those rules well enough to win (aka profit), then so be it.  I am by no means saying that it is perfect – yet I would love to hear an alternative suggestion for a structure.

For what it’s worth…
I can’t imagine such an entity being under the power of Congress…

I also can’t imagine such an entity being under the power of the Prez…

To me, it makes perfect sense that it be outside the power of elected govt officials. As I understand, the Fed Board of Gov’s are appointed by the Prez for a 14 yr term, with a gov’s seat expiring every couple of years.

How do you think it should be changed?


I don’t always agree with Fed policies nor the timing of Fed events/changes.  Yet, I understand the rules and, as such, adjust accordingly when necessary.  If someone did not understand the rules, it is understandable that they would
be upset.  Yet, the onus falls on them to learn the rules – nobody was born  understanding them nor given them on a silver spoon (not intended as a reference to the seven(?) fed families).


Frankly, I’m not sure that I believe that the Fed actually is ‘the problem’ or even "the cause of the problem".    Rather, figuratively speaking, ‘all of us’   are ‘the cause of the problem’!


For example – those whose house became an ATM and are now in trouble – you are ‘the cause of the problem’….not the Fed.

Personally, "I" am ‘the cause’.  I’m sorry everyone – my bad!            I used to take some of the 0% credit card checks, cash ’em, make a stock trade, and then return the funds – proud that I turned free money into free money.    I capitalized on a by-product of the Fed’s actions of loose credit – which means,  arguably, ‘I am the cause of the problem’ for doing that.

I showed friends how to finance new car purchases at 0% for years – and when the time came that they couldn’t get any more 0% $, then they’d pay it off.  They learned how to capitalize on cheap credit, a by-product of the Fed’s action. 

Both of those actions make "me" guilty of being part of ‘the cause of the problem’.   But the problem aint the Fed, it is me.

Said differently –
I live in a major city.  At night, within 2 miles, I can usually find a street prostitute and/or a junkie selling crack or smack.  If I choose to become a ‘client’ of either or both, and end up addicted or with aids,  is it the fault of the farmer who
grew the poppy seeds?  How about any/every one in that distribution chain?   Is it the fault of the parents of the prostitute?    Nope.   The fingers of blame should point to me and me alone.  Just becuz something is ‘available’ does not mean ya have to participate…even if tantilizingly free (re: credit cards – not illegal offerings)

In that same vein, the blame lies not with the Fed…blame lies with the users.

TWISI, "hanging the crooks" (btw, who are they and why are they crooks?) 
     or
 "ending the fed" does not solve the underlying issue – which is recognizing that the "users" are to blame….am I missing something?

Again, I’m not trying to create an argument – I truly would love to hear ideas for an alternative to the current Fed structure.

Thank you in advance
JL

  • Thu, Mar 12, 2009 - 08:06am

    #9
    Peak Prosperity Admin

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    Re: Greenspan

JL, there’s a lot of posts on here about the Fed system.  There are videos like Creature from Jekyll Island, Debt as Money, The Money Masters, that you should watch.  I hope you do…query them on video.google…we need more people to understand this cancer that’s about to kill the patient.  Debt-based money which enslaves everyone to the banks whose owners become super rich…a private incentive to drastically inflate…is the problem.  

I don’t want to repeat a lot of my posts and others that have explained how the Fed is the problem.  I’ll just say in response to your sentence:

[quote=JL]For example – those whose house became an ATM and are now in trouble – you are ‘the cause of the problem’….not the Fed[/quote]

Ask yourself: why is it that all of a sudden, first time in a century, millions of people suddenly turned crazy and used their house as an ATM?  That was just a random fluke of individual minds all of a sudden doing something they never did before?  Come on.  Clearly, there’s a systemic reason.  

Secondly I’ll say this isn’t just a problem with sub-prime borrowers, i.e. the people using houses as ATMs.  We’re about to see the collapse of commercial estate, prime real estate, other parts of the financial industry (some of it’s already happening quietly as big banks are sucking up little banks).  This goes way beyond individual borrowers…they were just one little enabling piece of the overall systemic puzzle.  

As far as the prostitute/drug example goes, it’s true that individual responsibility plays a role.  But you can’t just blame demand when supply is an equal partner in a market.  And it’s not true to say "there’d be no supply if there was no demand." We know there are powerful moneyed interests behind the supply of markets like this…it’s pushed on people just as media is, consumer goods are, and most other industries.  Yes demand exists a priori.  But also, yes supply creates its own demand.

  • Thu, Mar 12, 2009 - 11:51am

    #10
    Peak Prosperity Admin

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    Re: Greenspan

 
I have to disagree (sort of).  Just like the left wing / right wing paradigm.  The media is conditioning some people to blame the FED and the other half The Government.  It’s the entire package of Both, can’t blame just one side.  It’s the combination of both.  
 
By 2012 if we do not get more ethical people in office, then a Revolution must take place.  
 
~Joe 
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