The Greenspan Mystery
Alan Greenspan was born in 1926 in
New York City, the son of a stockbroker and a saleswoman. When Alan was five
years old, his mom and dad (herbert) divorced. Following the divorce, Herbert
became very distant. Visits to his son were infrequent at best. "He disappeared
from their lives very fast," recalls cousin Wesley Halpert. "Alan hardly got to
see him. But I do remember the ecstasy that Alan exhibited on those rare
occasions when his father visited."
Wesley and Marianne Halpert,
the children of Rose's sister, Mary, lived half a block away from Alan. Alan
spent a great deal of time with his cousins, and they grew as close as siblings.
Wesley was older, Marianne younger. Their father, Jacob Halpert, became almost
like a second father to Alan. Wesley recalls an aching and almost
boundless neediness on the part of his cousin. "Here was my father," says
Wesley. "He was one father with two hands. But there were three kids: Alan,
Marianne, and myself. We'd be walking down the street and Alan would kind of
worm his way between me and my father and grab my father's hand."
Hilton Levy a bandmate from his high school days..."remembers bandmate Greenspan as
rather abstruse. 'He never said anything definitively. It was always
double-talk—very much like today.'"
When Alan was nine, his father—in the
course of one of his increasingly infrequent visits—gave him a copy of a book
that he had recently published called Recovery Ahead! It was a defense of
Franklin D. Roosevelt's New Deal, in which he argued that government programs
could help spur the economy out of depression. The book bore the following
inscription from Herbert Greenspan to Alan Greenspan: "May this my initial
effort with a constant thought of you branch into an endless chain of similar
efforts so that at your maturity you may look back and endeavor to interpret the
reasoning behind these logical forecasts and begin a like work of your own. Your
Dad."
I have often suspected that such early indoctrination from such a
mystical-type father figure, had a profundly deep affect on his young mind.
I believe that such damaging early experiences have had an affect on his
actions later on in life.
Greenspan got his Bachelor of Arts and
Master's degrees in Economics from New York University and then went to Columbia
University to pursue his Doctorate. Greenspan left Columbia when he ran out of
money, going to work for the National Industrial Conference Board (NICB) as a
professional economist. He eventually got his Ph.D. from NYU in 1977, without
ever having to write a dissertation.
In the 1950s, Greenspan, who had
been steeped in the free-market skepticism of John Maynard Keynes along with
most economists of his generation, became an friend of Ayn Rand. Justin
Martin writes, "Whenever the media inquired about their association, he
responded in ways that played up her seriousness as a thinker and his earnest
debt of gratitude to her . . . for opening his eyes to the moral dimension of
capitalism."
Of course this is same gratitude that I and many Ayn
Rand fans feel. The realization that self interst is really nothing to be
ashamed of, that the almighty goal of sacrifice & altruism some "leaders"
push is a flawed ideology causing untold death , suffering, starvation and
sorrow. It is not surprising that Alan felt the same strong emotions of
relief and pride that all of human civilization is built upon the enlightened
self interest of intelligent humans in history, not the sacrifice of ones own
goals and desires for "something greater than
oneself."
Greenspan enjoyed the acceptance he received as a musician
and bandmember. Everyone knows that bands are a great way to get girls and it is
said that Greenspan did fairly well in this department as a result of his
obivious effort, the deliberate use of his mind, it certainly wasn't his GQ
looks and athletic prowess that won him the ladies. Greenspan must have enjoyed
being around people who encouraged intellectual conversation as opposed to
deriding it. While hanging out with Ayn Rand, who has been described by
critics as simply a cult leader, he won her respect. He must have enjoyed
the reputation this gave him amongst her devoted followers.
In
1966 he wrote this article on
the role of government when it comes to "managing" a currency and the economy.
It is a good article, although the description of early currencies and
what is required of currencies is not as good as Rothbard's extensive writings
on the topic. The juicier parts of the article are quoted her:
Greenspan wrote:
"But the process of cure was misdiagnosed
as the disease: if shortage of bank reserves was causing a business decline-
argued economic interventionists-why not find a way of supplying increased
reserves to the banks so they never need be short! If banks can continue to loan
money indefinitely--it was claimed--there need never be any slumps in business.
And so the Federal Reserve System was organized in 1913. It consisted of twelve
regional Federal Reserve banks nominally owned by private bankers, but in fact
government sponsored, controlled, and supported. Credit extended by these banks
is in practice (though not legally) backed by the taxing power of the federal
government.
...
When business in the United States underwent a
mild contraction in 1927, the Federal Reserve created more paper reserves in the
hope of forestalling any possible bank reserve shortage. More disastrous,
however, was the Federal Reserve's attempt to assist Great Britain who had been
losing gold to us because the Bank of England refused to allow interest rates to
rise when market forces dictated (it was politically
unpalatable).
...
The "Fed" succeeded: it stopped the gold loss,
but it nearly destroyed the economies of the world, in the process. The excess
credit which the Fed pumped into the economy spilled over into the stock
market-triggering a fantastic speculative boom. Belatedly, Federal Reserve
officials attempted to sop up the excess reserves and finally succeeded in
braking the boom. But it was too late: by 1929 the speculative imbalances had
become so overwhelming that the attempt precipitated a sharp retrenching and a
consequent demoralizing of business confidence. As a result, the American
economy collapsed.
...
The world economies plunged into the Great
Depression of the 1930's.
...
With a logic
reminiscent of a generation earlier, statists argued that the gold standard was
largely to blame for the credit debacle which led to the Great Depression. If
the gold standard had not existed, they argued, Britain's abandonment of gold
payments in 1931 would not have caused the failure of banks all over the world.
(The irony was that since 1913, we had been, not on a gold standard, but on what
may be termed "a mixed gold standard"; yet it is gold that took the blame.)
But the opposition to the gold standard in any form-from a growing
number of welfare-state advocates-was prompted by a much subtler insight: the
realization that the gold standard is incompatible with chronic deficit spending
(the hallmark of the welfare state). Stripped of its academic jargon, the
welfare state is nothing more than a mechanism by which governments confiscate
the wealth of the productive members of a society to support a wide variety of
welfare schemes. A substantial part of the confiscation is effected by taxation.
But the welfare statists were quick to recognize that if they wished to retain
political power, the amount of taxation had to be limited and they had to resort
to programs of massive deficit spending, i.e., they had to borrow money, by
issuing government bonds, to finance welfare expenditures on a large scale.
Under a gold standard, the amount of credit that an economy can support
is determined by the economy's tangible assets, since every credit instrument is
ultimately a claim on some tangible asset. But government bonds are not backed
by tangible wealth, only by the government's promise to pay out of future tax
revenues, and cannot easily be absorbed by the financial markets. A large volume
of new government bonds can be sold to the public only at progressively higher
interest rates. Thus, government deficit spending under a gold standard is
severely limited.
The abandonment of the gold standard made it possible
for the welfare statists to use the banking system as a means to an unlimited
expansion of credit. They have created paper reserves in the form of government
bonds which-through a complex series of steps-the banks accept in place of
tangible assets and treat as if they were an actual deposit, i.e., as the
equivalent of what was formerly a deposit of gold. The holder of a government
bond or of a bank deposit created by paper reserves believes that he has a valid
claim on a real asset. But the fact is that there are now more claims
outstanding than real assets.
The law of supply and demand is not to be
conned. As the supply of money (of claims) increases relative to the supply of
tangible assets in the economy, prices must eventually rise. Thus the earnings
saved by the productive members of the society lose value in terms of goods.
When the economy's books are finally balanced, one finds that loss in value
represents the goods purchased by the government for welfare or other purposes
with the money proceeds of the government bonds financed by bank credit
expansion.
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. If there were, the government would have to make its holding illegal, as
was done in the case of gold. If everyone decided, for example, to convert all
his bank deposits to silver or copper or any other good, and thereafter declined
to accept checks as payment for goods, bank deposits would lose their purchasing
power and government-created bank credit would be worthless as a claim on goods.
The financial policy of the welfare state requires that there be no way for the
owners of wealth to protect themselves.
This is the shabby secret of the
welfare statists' tirades against gold. Deficit spending is simply a scheme for
the "hidden" confiscation of wealth. Gold stands in the way of this insidious
process. It stands as a protector of property rights. If one grasps this, one
has no difficulty in understanding the statists' antagonism toward the gold
"
I believe that Greenspan has never written anything
since that is closer to the truth than the above paragraphs. The Force has
always been with Greenspan, but on this particular day it was very strong and it
was the rgood side of the Force. Like a young Anakein Skywalker, he had a
lot of potential, but his fatherless childhood deprived him of the self respect
to turn away from the powerlust that obviously attracted him to Ayn Rand and
later led him to spend to work for many White House rulers(do you really think
they would name it the "Dark House"?).
First he worked for Nixon then
Ford, the he weaseled his way into the Reagan Administration where he was
appointed to head up a board to study the statist welfare program known as
Social Security. Would he tell the world about a horrible idea SS was in
the first place and how it was basically stealing from children and future
generations of Americans. No, he knew that would not advance his standing
in society, he had gotten where he had by sacrificing his own "high ideology"
and doing what the public would rather see, doing what was pragmatic.
Here are Greenspan's complete
findings, I'll just give brief outline:
The National
Commission makes the following recommendations unanimously:
(1) The members of the National Commission believe that the Congress, in its
deliberations on financing proposals, should not alter the fundamental structure
of the Social Security program or undermine its fundamental principles.* The
National Commission considered, but rejected, proposals to make the Social
Security program a voluntary ones or to transform it into a program under which
benefits are a product exclusively of the contributions paid, or to convert it
into a fully-funded program, or to change it to a program under which benefits
are conditioned on the showing of financial need.**
In the report he concluded that we needed payroll taxes to increase by at least 20% in
the next 7 years.
Overall, between 1950 and 1990, the percentage of Federal
revenue from corporate and excise taxes dropped from 45 to just 12 percent.
During that same period, the share of revenue from individual income and payroll
taxes jumped from 51 to 83 percent, most of the increase falling on middle and
low income taxpayers. That increased burden on low and middle income families is
one of the reasons why so many of those families are struggling, in spite of the
economic boom of the 90s.
Greenspan wrote the letter (take
a look) recommending the president enact this!
Does this seem at all
wierd to you? Is there any question that by 1983 he had converted completely to
the dark side? If he were merely biding his time before gaining enough power to
before being able to convince someone that free markets were good, he would have
certainly done so by now. No he is far past the point of no return, he
didn't want to end up a dead guy most the world had never heard of like his old
acquantaince Murray Rothbard. Greenspan is enjoying every mintue of his
fame.
Look at him buddying up with the most powerful people in the
world;
More recently he has been doing things much more
devious than heading a public commission on SS. Yes, I am alluding to
gold market intervention that is kept secret from the public in order to
disguise how ineptly the government is managing our currency, and make
politicians look better. Greenspan helps as much as he can although I
sense that his dark side powers of illusion are running low. I understand
that a strong skepticism of conspiracy theories is the politically correct
stance in our society right now. However, if you believe there is any
truth in anything I have said in my articles then read the hyperlink above to
see some of the reasons I am deeply skeptical about the honesty of our
government.
US Representative Ron Paul seems to agree with me.
Paul has been trying to get Greenspan to answer questions but
Greenspan avoids them. Ron Paul is a former libertarian candidate for
US president. Of course he lost, so he stayed in Texas and ran for
Congress as a republican so he could win. I worry that he could be
converted to the dark side like Greenspan has, but he seems to be trying to get
the truth out. He always votes against government expansion whether it is
along party lines or not. Bush and establishment republicans like
Gingrich help campaign against him in local elections, they don't like him. You
can bet they will not be offering Paul spots on any big commissions any time
soon.
I'd love to have a private conversation with
greenspan. Would I make Greenspan get angry? Would he tell me that he just
wants his daddy that left him as a child to like him so he has wasted his entire
life advancing the Keynsian/FDR policies that his dad liked so much?(i.e. he's
simply a hurt innocent child) or is his spirit darker than that? Would he tell
me "you have to be pragmatic about things Gabe". "If I hadn't done those
horrible things then somebody else would have." I've seen quotes from him
in the last few years that he still believes in his old ideas as a "matter of
high philosphy". Would he explain to me some parts of reality that I am
simply too young and naive to understand as of now? Or would he confess in
tears "ok i admit it!! I have become worse than Ellsworth Toohey, worse than
Wesley Mouch. I can't believe I have sacrificed my highest philosophy in order
to hang out with childish actors with names like "W" and "Slick Willie"!!! I
hate myself!"
Of course I'm your friend. I'm everybody's
friend. I'm a friend of humanity. -- Ellsworth Toohey, The Fountainhead
I don't know the answer but I'd love to here opinions from people who
are closer to the situation than I am.
Gabe Harris
GabeHarris.com
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