01-27-2020, 01:08 AM
(01-14-2020, 07:48 PM)John J. Xenakis Wrote: And then there's the continuing mystery of Alan Greenspan. I followed
all his speeches in the early 2000s. All the mainstream economic
reporters were whining, "Whaaa, whaaa, whaaa, Greenspan uses big
words, and even though I'm supposed to be an expert, I'm actually too
stupid to understand what he's saying."
I didn't understand Greenspan's speeches at first either, but I would
go the Federal Reserve web site and read it over a few times, and then
I always understood. But that was beyond the mental capacity of all
the "experts" at WSJ, CNBC, and elsewhere.
So as I wrote at the time, Greenspan knew in 2004 that there was a
housing bubble, but he thought it was a good thing, because it gave
people more money. In Dec 2004, he told the WSJ that he knew in the
late 90s that a bubble was growing, but that he decided to take care
of it later. It wasn't until 2005 that he became alarmed.
Milton Friedman had "proved" that the Great Depression had occurred
because the Fed kept interest rates too high, and could have been
prevented completely by lowering interest rates a bit. He said that
any depression could be ended quickly by using a helicopter to drop
money and spread it around.
I'd note that the "helicopter" speech was Bernanke's, not Greenspan's. Greenspan gave the "irrational exuberance" speech in 1996, at the beginning of the dot com bubble. It should be noted that when the dot com bubble burst, the recession was shallow and short, partly thanks to Greenspan's management.
Unfortunately Greenspan was no longer in charge when the housing bubble burst.
