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Old 06-09-2005, 02:30 AM   #1 (permalink)
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Is Alan Greenspan's Legacy the Destruction of Fiat Currency and Worldwide Depression?

Since it's inception in 1913, the Federal Reserve has presided over the devaluation of the dollar by 97 percent. Some view Alan Greenspan as a positive influence in managing the U.S. economy and the purchasing power of U.S. paper currency. Is this really an accurate conclusion of how his legacy as Fed Chairman will be regarded in the future.

IMO, Greenspan chose, at every turn, to sacrifice the longer term soundness of the dollar, in favor of short term expediency; economic stimulation of the American economy, at any cost. In so doing, my research shows that he has contradicted much of what he knew, as an economist, and has accelerated the collapse of the U.S. dollar, and put the U.S. on a path to no return.

Greenspan is reduced to the ridiculous quote at the bottom of this post, and all we can do is ask, "are we there yet", and buy silver, the best protection of future personal, economic security, "on the dips".
Quote:
http://www.house.gov/paul/tst/tst2005/tst022105.htm
The Maestro Changes his Tune

February 21, 2005

Nearly 40 years ago, Federal Reserve chair Alan Greenspan wrote persuasively in favor of a gold monetary standard in an essay entitled Gold and Economic Freedom. In that essay he neatly summarized the fundamental problem with fiat currency in a few short sentences: “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… 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… 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 standard.”

Today, however, Mr. Greenspan has become one of those central planners he once denounced, and his views on fiat currency have changed accordingly. As the ultimate insider, he cannot or will not challenge the status quo, no matter what the consequences to the American economy. To renounce the fiat system now would mean renouncing the Fed itself, and his entire public career with it. The only question is whether history will properly reflect the destructive nature of Mr. Greenspan’s tenure.

I had an opportunity to ask him about his change of heart when he appeared before the House Financial Services committee last week. Although Mr. Greenspan is a master of evasion, he was surprisingly forthright in his responses to me. 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. Yet this begs the question: If he was so wrong in the past, why should we listen to him now?

First, the Federal Reserve does not mimic a gold standard by any measure. The clearest example of this lies in our current account deficit, which our fiat currency encourages. Under a gold standard we would not have exchange rate distortions between the Chinese renminbi and the U.S. dollar, for example. True currency stability is impossible when fiat dollars can be produced at will and foreign lenders bankroll our deficits.

Second, inflation is a much greater problem than the federal government admits. Health care, housing, and energy are three areas where costs have risen dramatically. The producer price index is rising at the fastest rate in seven years. Bond prices are rising. To suggest that rapid expansion of the money supply and artificially low interest rates do not ultimately cause price inflation is absurd.

Third, Fed policies do indeed have adverse political ramifications. Fiat currency and big government go hand-in-hand. Without a gold standard, Congress is free to spend recklessly and fall back on monetary expansion to pay the bills. Politically, it’s easier to print new dollars than raise taxes or borrow overseas. The Fed in essence creates paper reserves that enable Congress to undertake spending measures that far exceed tax revenues. The ill effects of this process are not felt by the politicians, who can always find popular support for new spending. Average Americans suffer, however, when their dollars are “confiscated through inflation,” as Mr. Greenspan termed it.

It’s not enough to question the wisdom of Mr. Greenspan. Americans should question why we have a central bank at all, and whose interests it serves. The laws of supply and demand work better than any central banker to determine both the correct supply of money in the economy and the interest rate at which capital is available- without the political favoritism and secrecy that characterize central banks. Americans should not tolerate the manipulation of our economy and the inflation of our currency by an unaccountable institution.
Quote:
http://www.merkfund.com/merk-perspec...005-06-01.html
Home > The Merk Perspective > Merk Insights > June 1st 2005
The Fed opts for growth, ignoring imbalances and inflation

Axel Merk, June 1st 2005

Dallas Federal Reserve Bank President Richard Fisher, using a baseball analogy, said the Fed is in its 8th inning, and will raise rates one more time at its next meeting. A standard baseball game has 9 innings. Then, the Fed may or may not raise rates further, “go into overtime.” Fisher implies that the Fed is pretty much done raising rates. Fisher is new to his post and may have talked more broadly than he was supposed to; however, his statement was rehearsed, and the markets take it seriously.

We have long argued that the U.S. economy is too leveraged to allow the Fed to aggressively raise rates to curb the housing bubble and inflation that is creeping through the supply chain. Any forceful action would cause the housing bubble to collapse and throw the economy into a severe recession. For now, it looks like the Fed opts for continued growth rather than correcting imbalances. Inflation that has been creeping up will be fostered and entrenched in more and more sectors of the economy.

In the meantime, the yield curve is flattening. On the one hand, we have a slowing economy; on the other hand, we have an accommodating monetary policy that has contributed to numerous capital misallocations (“bubbles” in modern parlance). As long as the Fed is artificially boosting the economy, we are setting ourselves up for an ever more severe adjustment process when it does happen. Richard Russell dug up the following quote from Alan Greenspan – from 1966:

<b>"The excess credit which the Fed pumped into the economy spilled over into the stock market -- triggering a fantastic speculative boom. Belatedly, the 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 consequent demoralizing of business confidence." Alan Greenspan, The Objectivist, 1966</b>

One thing that certainly has not changed is the Fed’s confidence to steer this economy. Market forces will prevail in the end – the question is only which valve will have to give. When the Fed manages the entire yield curve, it may well be the dollar that has to give sooner or later. For now, the dollar enjoys short-term relief.
Quote:
http://www.merkfund.com/merk-perspec...005-05-26.html
The Merk Perspective > Merk Insights > May 26th 2005
U.S. Current Account Deficit may hit $900 billion next year

Axel Merk, May 26th 2005

The Organization for Economic Cooperation and Development (OECD) is warning that the U.S. current account deficit will hit $900 billion or 6.7 percent of U.S. gross domestic product in 2006. These very large numbers are caused by a continued reinforcement of global imbalances: on the one hand, a very low U.S. savings rate, high U.S. consumption fostered by very low interest rates, and cheap Asian goods flooding the U.S. market (cheap because Asia subsidizes their exports through low exchange rates). On the other hand, we have lackluster demand in Europe and some Asian countries, notably Japan. OECD chief economist Jean-Philippe Cotis told the Financial Times: "We are not saying there will be a doomsday tomorrow morning ... but because the adjustments [to global imbalances] are relatively slow, we are running the risk that an accident will happen. [..] Time is running out - the numbers are getting big, big, big."

As pressure has mounted on China to revalue their currency, China has instead opted to impose export tariffs on select textiles and other goods. For China, this path of appeasing Western complaints about dumping their markets has the advantage that they do not have to devalue their massive currency reserves, that the Chinese government increases tax revenue, and that they can micro-manage their economy. Whether this is enough to counter the momentum of blaming China for all that is wrong with the global imbalances remains to be seen. As we have mentioned before, while China is yielding in the textile battle, China is winning the high-tech war: China recently introduced legislation to require foreign companies supplying high technology products to the government to have China based research and development.

Europe will not suddenly switch to a supply-side stimulus. The most notable event recently in Europe was Germany's calling of early elections in the fall. No matter who wins this election, this is a welcome boost to the European reform agenda: Schroeder's government had become a lame duck government, and all major political parties agree that reforms must take place. A new election will give a fresh mandate; we expect that this will accelerate reforms in Germany.

This weekend, the French are voting on whether to accept the new EU constitution. While a French no-vote would be a major disappointment for EU politicians, it would not be the end of the European Union. It would be a stark reminder to European politicians that politics must involve communication with its citizens. Europe has implemented many reforms with its current structure, and while a passing of the constitution is with no doubt helpful, Europe will have to find its way no matter what. Given that numerous governments in Europe are in politically weak positions, allowing for a fresh set of politicians to look at the constitution may cause a significant delay; opponents to the new EU constitution argue that such a delay is not the end of the world.

In the U.S., Greenspan now openly uses the "bubble" word when referring to the U.S. housing market. This late admission is in line with his sluggish reaction to the "irrational exuberance" he had noted in the stock market a few years ago. The U.S. economy is too leveraged to allow the Fed to forcefully act against. However, any delays will make the adjustment process only more severe. The housing bubble is a direct result of the highly accommodating monetary policy.

I was invited to comment on CNBC last week on the Treasury Department's currency report. While the U.S. blames China for subsidizing their currency, we tend to forget that U.S. subsidizes its own economy with their own set of tools. Fostering a low U.S. savings rate and excessive consumption is as much a factor to the global imbalances as a currency peg by China. Now, as we are approaching a $900 billion dollar current account deficit, we believe that it becomes increasingly likely that the markets will force an adjustment in the global imbalances.

Such an adjustment may include a global flight out of the dollar, higher interest rates and a collapse in U.S. housing prices.
Quote:
http://www.kitco.com/ind/Daughty/jun082005.html
.............On the web site FromTheWilderness.com we read "It is easy to cast Dr Greenspan as the befuddled 'Mr. Magoo' leading America to economic and financial ruin. However, such a denigration of this man's abilities is entirely misleading and dangerously erroneous. The Fed has some of the finest financial and economic brains on the planet." Personally, I say "Huh?" Alan Greenspan and the other Federal Reserve knot heads are not brilliant. They are merely clever, in that they managed to prove something that is not true, exactly as Aristotle, Ptolemy and many brilliant others all "proved" that the earth is the center of the universe, and that the earth is flat. And let's not forget all the brilliant doctors, who determined the exact number of leeches that it takes to cure a fever. And how about those guys who determined the exact number of angels that can dance on the head of a pin? They were all clever, but none of them were brilliant.

If Alan Greenspan and the rest of those Federal Reserve morons WERE brilliant, they would have immediately seen that the whole Keynesian, econometric idiocy that they so ruthlessly champion is a real piece of ugly stupidity, and that Mises and that whole Austrian crowd are exactly right. As proof, the Austrians have proved, time and time again, that Keynes was wrong, and yet, the idiot Keynesians have never disproved a single idea of the Austrian Business Cycle Theory, which brings into question whether they are even clever or not! And beyond that, the economy is proceeding along exactly as Mises and the Austrian-school economists have confidently predicted, whereas the Federal Reserve has been so wrong, for so long, that they have had to resort to constant, drastic, over-the-top measures! Can it be any plainer than that? Sheesh!

But as long as people are taking on debt, the question becomes "How much debt can an economy take on?" The answer is usually something glib, maybe something on the order of "Obviously not forever, there is a limit how far into debt you can get." But is this actually true? Perhaps there IS no limit to how much debt can be shouldered! And so when the economy is faltering, a central bank can just create money and credit like it is gushing out of a fire hose! The crowd cheers! And thus the brave Federal Reserve struts around, preening like they are hotshot heroes, courageously extinguishing the destructive fires of stagnations, and deflations, and recessions, and depressions, and all the other unimaginable suffering that always accompanies the collapse of an economy, which collapses because too much freaking money and too much freaking credit were created during a previous boom. Can it always, always, always pull this amazing trick off?

My standard answer is, "Hahahahaha!" If it could happen, then everybody would have always been doing it. And when they did try this silly crap, it always ended in disaster, and THAT is why intelligent countries do NOT try it, and actually take steps to make sure that nobody tries it. Until now. Until Alan Greenspan..........
Quote:
http://www.alwayson-network.com/comm...=P9646_0_4_0_C
Debtor Nations Dream of Deflation
Think this bubble is big? Wait until you see the next one. Part One of three.

ericjanszen [Trident Capital] | POSTED: 04.06.05 @01:21

<h5>"We can guarantee cash benefits as far out and at whatever size you like, but we cannot guarantee their purchasing power."
—Alan Greenspan, appearing before the Senate Banking Committee on Feb. 15, 2005, in response to Democratic Senator Jack Reed of Rhode Island on the topic of funding Social Security.</h5>

Last edited by host; 06-09-2005 at 02:32 AM.. Reason: Fixed spelling error in thread title.......
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Old 06-09-2005, 03:43 AM   #2 (permalink)
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Thank you for the articles, host - interesting reading. I was such a fan of Greenspan even back in the Regan and Bush years, and Clinton always seemed to leave him alone so that he could manage the monetary cycles in slow, calculated steps. I'm not sure what the motivation was for him to have become so loose and mallable to this administration's short term agendas? First they torch the political currency of Colin Powell, and now they have Greenspan badmouthing himself and his basic monetary theory!
Quote:
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
Al, how do you sleep at night??
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Old 06-09-2005, 05:19 AM   #3 (permalink)
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Ya, what's funny is that people blame Bush for the economy. I think presidents have had very little to do with the economy since the Federal Reserve was instituted.

The Federal Reserve is the real economic problem, not unemployement, tax cuts for the rich, etc. How corrupt is a government that can literally print more money? I'd go to jail if I tried that.

"We can guarantee cash benefits as far out and at whatever size you like, but we cannot guarantee their purchasing power." Alan Greenspan
WTF, that pretty much sums up the federal reserve. Go ahead and print us some more benefits that will fix the situation.
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Old 06-09-2005, 05:39 AM   #4 (permalink)
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Quote:
Originally Posted by samcol
Ya, what's funny is that people blame Bush for the economy. I think presidents have had very little to do with the economy since the Federal Reserve was instituted.

The Federal Reserve is the real economic problem, not unemployement, tax cuts for the rich, etc. How corrupt is a government that can literally print more money? I'd go to jail if I tried that.

"We can guarantee cash benefits as far out and at whatever size you like, but we cannot guarantee their purchasing power." Alan Greenspan
WTF, that pretty much sums up the federal reserve. Go ahead and print us some more benefits that will fix the situation.
Samcol, you are right that people don't realize the political clout and power that the Fed has in this country, and they get overlooked. Unfortunately their bag of tricks is powerful, but limited. Interest rates and money supply are really it, and there are hundreds of factors that will play a role in the overall economy. Congress plays a huge roll in setting budgets and appropriating funds, but none of these tools will be effective if the President isn't responsible with his decision making.

They are all to blame for the nasty ride we have in front of us...
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Old 06-10-2005, 04:40 PM   #5 (permalink)
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Quote:
Originally Posted by chickentribs
Samcol, you are right that people don't realize the political clout and power that the Fed has in this country, and they get overlooked. Unfortunately their bag of tricks is powerful, but limited. Interest rates and money supply are really it, and there are hundreds of factors that will play a role in the overall economy. Congress plays a huge roll in setting budgets and appropriating funds, but none of these tools will be effective if the President isn't responsible with his decision making.

They are all to blame for the nasty ride we have in front of us...
We as a society are responsible also, for we have grown accustomed to living on credit and being in debt, thinking, hoping, that we'll get it all paid off in time, as we charge another $100 for a meal, a movie and some cinema snack bar goodies.

WE allowed companies to merge and go heavily in debt and allowed the leveraged buyouts and so on, because we were told that the companies would be more prosperous, profitable and help our 401 k's and IRA and Mutual Funds.

We kept voting for politicians that would sidestep economy hardball questions and stick to balanced budgets, because we believed that the bad times wouldn't come, even though the reports and research and warnings for the past 20+ years have told us they would.

We kept believing that losing jobs overseas and cheaper products were ok.

We kept allowing businesses to raid pension plans and fix their books then watch as the executives golden parachute out as the companies go bankrupt.

We turned blind eyes and deaf ears to anyone who warned us, believing it was politically motivated and that they were nuts.......

And now the time is upon us and what are we going to do?

As the great RAY DAVIES of The KINKS wrote in the song "DRIFT AWAY" in 1991, a bit prophetic......

Quote:
Now all the politicians are running out of hope
They've burned all their bridges
Now they just can't cope
And who do we blame now we're all going broke?
It's that man over there
Who's hanging from a rope
Newsmen winding up the nation
A little bad news helps circulation
Pass on the panic to the population
It's all over, it's all over
It's all over now
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I just love people who use the excuse "I use/do this because I LOVE the feeling/joy/happiness it brings me" and expect you to be ok with that as you watch them destroy their life blindly following. My response is, "I like to put forks in an eletrical socket, just LOVE that feeling, can't ever get enough of it, so will you let me put this copper fork in that electric socket?"

Last edited by pan6467; 06-10-2005 at 04:53 PM..
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Old 06-10-2005, 04:56 PM   #6 (permalink)
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I agree with Pan that the big "we" has been far too passive about understanding and participating in the decisions that are being made for us. The big "we" has become blinded by party loyalty, because that is more convenient than taking the time to understand an issue from opposing perspectives.

"We" have become lazy and complaisant, which is far easier than employing our intellect to test our beliefs.
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Old 06-10-2005, 06:15 PM   #7 (permalink)
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Quote:
Originally Posted by Elphaba
I agree with Pan that the big "we" has been far too passive about understanding and participating in the decisions that are being made for us. The big "we" has become blinded by party loyalty, because that is more convenient than taking the time to understand an issue from opposing perspectives.

"We" have become lazy and complaisant, which is far easier than employing our intellect to test our beliefs.
Oh but how hard it is. I can run to the library and study economics. Even then I would probably have to put my faith in one economic theory or another. Who is right? Who do we trust? So far the only sure answer is: no one but I can't work with that...
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Old 06-10-2005, 06:17 PM   #8 (permalink)
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Quote:
Originally Posted by Elphaba
I agree with Pan that the big "we" has been far too passive about understanding and participating in the decisions that are being made for us. The big "we" has become blinded by party loyalty, because that is more convenient than taking the time to understand an issue from opposing perspectives.

"We" have become lazy and complaisant, which is far easier than employing our intellect to test our beliefs.
The most serious question "we" need to ask is will our children ever forgive us?
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I just love people who use the excuse "I use/do this because I LOVE the feeling/joy/happiness it brings me" and expect you to be ok with that as you watch them destroy their life blindly following. My response is, "I like to put forks in an eletrical socket, just LOVE that feeling, can't ever get enough of it, so will you let me put this copper fork in that electric socket?"
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Old 06-10-2005, 07:34 PM   #9 (permalink)
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Quote:
Originally Posted by pan6467
The most serious question "we" need to ask is will our children ever forgive us?
Will they have the education that is sufficient to ask the question? I fear, not.
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Old 06-10-2005, 07:40 PM   #10 (permalink)
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Quote:
Originally Posted by pan6467
The most serious question "we" need to ask is will our children ever forgive us?
I think they will manage.
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Old 06-10-2005, 08:41 PM   #11 (permalink)
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If you asked 100 people on the street of any major city what the Federal Reserve Bank does and how the changes in interest rates that you hear about on TV affect the economy, I would bet that no more than 5 of them could give even a basic answer to the question. Our country has pulled through market crashes, recessions, and a huge depression, and we've managed to survive, but it's going to keep on happening unless we educate ourselves on how our government works so that we can make informed decisions about who would do the best job of running it.
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Old 06-10-2005, 08:54 PM   #12 (permalink)
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Quote:
Originally Posted by MrSelfDestruct
but it's going to keep on happening unless we educate ourselves on how our government works so that we can make informed decisions about who would do the best job of running it.
In other words it will keep on happening.

Most people should just continue to do us the favor and not vote.
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Old 06-11-2005, 10:55 AM   #13 (permalink)
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I will be the first to admit that I do not understand macro-economics but from what little I do understand it seems to be a natural phenomenon that our (these) economic systems must crash and purge themselves from time to time. I don't think there are any examples in the world where they haven't. Manipulations like those of the federal reserve are probably just short term bandaids.
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Old 06-11-2005, 11:03 AM   #14 (permalink)
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This is the problem with fiat currency-based economies; THEY DON'T WORK.

When the currency is based upon something that has a finite, relatively fixed supply ( gold, silver, platinum, etc ) the currency cannot become inflated, because the supply can never grow beyond its' own ability to purchase goods and services. Once the currency is unhooked from its' Standard, however, you start to have major problems.

The first and largest of these is what we're seeing now. The Gov't needs money, so it has the Central Bank ( in this case the Fed. Reserve ) simply print some, which the Gov't then spends into circulation. This massively devalues the currency over time; 97% in the last 100 years, in the case of the US.
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Old 06-13-2005, 04:58 AM   #15 (permalink)
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Quote:
Originally Posted by The_Dunedan
This is the problem with fiat currency-based economies; THEY DON'T WORK.

When the currency is based upon something that has a finite, relatively fixed supply ( gold, silver, platinum, etc ) the currency cannot become inflated, because the supply can never grow beyond its' own ability to purchase goods and services. Once the currency is unhooked from its' Standard, however, you start to have major problems.
I understand that printing more money can cause hyper-inflation but there must be other reasons for economic systems to crash as well. Were we not on the gold standard during the great depression back in the 1930's?

It seems like all it takes is a certain percentage of the population to get nervous and stop buying things which leads to layoffs and more nervousness and things start spiraling downward.
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Old 06-13-2005, 10:56 AM   #16 (permalink)
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The Gold Standard was only partially in place. So-called Fractional Reserve Banking had been practiced piecemeal since the 1880s, but the Federal Reserve ( created 1913 ) took it to a national level; by the time Black Tuesday rolled around, over 60% of the country's money supply was Fiat-only, unbacked by anything.
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Old 06-14-2005, 05:07 PM   #17 (permalink)
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I'm not sure I am posting this in the best thread, but Greenspan has carefully expressed concern about the growing "haves" and "have nots."

Rich-Poor Gap Gaining Attention
By Peter Grier
The Christian Science Monitor

Tuesday 14 June 2005

A remark by Greenspan symbolizes concern that wealth disparities may destabilize the economy.

Washington - The income gap between the rich and the rest of the US population has become so wide, and is growing so fast, that it might eventually threaten the stability of democratic capitalism itself.

Is that a liberal's talking point? Sure. But it's also a line from the recent public testimony of a champion of the free market: Federal Reserve Chairman Alan Greenspan.

America's powerful central banker hasn't suddenly lurched to the left of Democratic National Committee chief Howard Dean. His solution is better education today to create a flexible workforce for tomorrow - not confiscation of plutocrats' yachts.

But the fact that Mr. Greenspan speaks about this topic at all may show how much the growing concentration of national wealth at the top, combined with the uncertainties of increased globalization, worries economic policymakers as they peer into the future.

"He is the conventional wisdom," says Jared Bernstein, senior economist at the Economic Policy Institute, a liberal think tank. "When I'm arguing with people, I say, 'Even Alan Greenspan....' "

Greenspan's comments at a Joint Economic Committee hearing last week were typical, for him. Asked a leading question by Sen. Jack Reed (D) of Rhode Island, he agreed that over the past two quarters hourly wages have shown few signs of accelerating. Overall employee compensation has gone up - but mostly due to a surge in bonuses and stock-option exercises.

The Fed chief than added that the 80 percent of the workforce represented by nonsupervisory workers has recently seen little, if any, income growth at all. The top 20 percent of supervisory, salaried, and other workers has.

The result of this, said Greenspan, is that the US now has a significant divergence in the fortunes of different groups in its labor market. "As I've often said, this is not the type of thing which a democratic society - a capitalist democratic society - can really accept without addressing," Greenspan told the congressional hearing.

The cause of this problem? Education, according to Greenspan. Specifically, high school education. US children test above world average levels at the 4th grade level, he noted. By the 12th grade, they do not. "We have to do something to prevent that from happening," said Greenspan.

So are liberals overjoyed by these words from a man who is the high priest of capitalism? Not really, or at least not entirely.

For one thing, some liberal analysts prefer to focus on the very tip of the income scale, not the top 20 percent. Recent Congressional Budget Office data show that the top 1 percent of the population received 11.4 percent of national after-tax income in 2002, points out Isaac Shapiro of the Center on Budget and Policy Priorities in a new study. That's up from a 7.5 percent share in 1979.

By contrast, the middle fifth of the population saw its share of national after-tax income fall over that same period of time, from 16.5 to 15.8. "Income is now more concentrated at the very top of the income spectrum than in all but six years since the mid-1930s," asserts Mr. Shapiro in his report.

For another, some Democratic analysts believe that Greenspan's emphasis on education as a cure ignores other causal factors of inequity. Data show an income gap widening among college graduates, says Mr. Bernstein. The quality of US high schools has nothing to do with that, he says. Instead it's partly a function of overall monetary and fiscal policies. "Greenspan takes a very long term view of the situation," says Bernstein.

On the other hand, some conservatives label the whole inequality debate a myth. The media's recent focus on the subject stems from its liberal bias and clever press management by Democrats, they say.

Inequality studies often ignore the wealth created by rising house prices, for instance - and homes represent the most substantial investment by many, if not most, Americans.

Nor do US workers necessarily perceive themselves on the losing end of a rigged capitalist game. A recent New York Times survey found that while 44 percent of respondents said they had a working-class childhood, only 35 percent said they were working class today, points out Bruce Bartlett, a senior fellow at the National Center for Policy Analysis. Eighteen percent said they grew up lower class, while only 7 percent said they remained in that societal segment.

When Democrats today raise the inequality flag, they are simply trying to attack President Bush's tax cuts, albeit indirectly, says Mr. Bartlett. "A lot of this is driven by the estate-tax debate," he says.

And as Greenspan himself points out, by many measures the economy is doing well. Unemployment is down, GDP is up. Inflation still slumbers. Current standards of living are unmatched.

"So you can look at the system and say it's got a lot of problems to it, and sure it does. It always has," Greenspan told the JEC last week. "But you can't get around the fact that this is the most extraordinarily successful economy in history."


Greenspan knows that the stockmarket hangs on his every word. It would seem that he wishes to ride the fence on this one. Is it a dangerous economy or an extraordinarily successful economy?
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Old 06-15-2005, 01:19 PM   #18 (permalink)
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Our economy is tending more and more toward low-skill labor. More education is garbage. Even if we were as smart as the rest of the world, off-shore labor will always be cheaper.
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Old 06-15-2005, 01:38 PM   #19 (permalink)
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Quote:
Originally Posted by EULA
Our economy is tending more and more toward low-skill labor. More education is garbage. Even if we were as smart as the rest of the world, off-shore labor will always be cheaper.
Hmmm.... and yet those who argue against keeping our factories claim we are educated too much to do factory work. They have claimed numerous times on these boards that the workforce is beyond manufacturing.
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I just love people who use the excuse "I use/do this because I LOVE the feeling/joy/happiness it brings me" and expect you to be ok with that as you watch them destroy their life blindly following. My response is, "I like to put forks in an eletrical socket, just LOVE that feeling, can't ever get enough of it, so will you let me put this copper fork in that electric socket?"
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Old 09-29-2007, 09:13 PM   #20 (permalink)
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Old 09-30-2007, 05:17 AM   #21 (permalink)
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Nice to see you, host.
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Old 10-01-2007, 05:32 PM   #22 (permalink)
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Originally Posted by filtherton
Nice to see you, host.
Yes nice to see you Host, how was Gitmo?
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