Best of the Week
Most Popular
1. Market Decline Will Lead To Pension Collapse, USD Devaluation, And NWO - Raymond_Matison
2.Uber’s Nightmare Has Just Started - Stephen_McBride
3.Stock Market Crash Black Swan Event Set Up Sept 12th? - Brad_Gudgeon
4.GDow Stock Market Trend Forecast Update - Nadeem_Walayat
5.Gold Significant Correction Has Started - Clive_Maund
6.British Pound GBP vs Brexit Chaos Timeline - Nadeem_Walayat
7.Cameco Crash, Uranium Sector Won’t Catch a break - Richard_Mills
8.Recession 2020 Forecast : The New Risks & New Profits Of A Grand Experiment - Dan_Amerman
9.Gold When Global Insanity Prevails - Michael Ballanger
10.UK General Election Forecast 2019 - Betting Market Odds - Nadeem_Walayat
Last 7 days
UK Election Seats Forecasts - Tories 326, Labour 241, SNP 40, Lib Dems 17 - 12th Dec 19
UK General Election 2019 Final Seats Per Party Forecast - 12th Dec 19
What UK CPI, RPI INFLATION Forecasts for General Election Result 2019 - 11th Dec 19
Gold ETF Holdings Surge… But Do They Actually Hold Gold? - 11th Dec 19
Gold, Silver Reversals, Lower Prices and Our Precious Profits - 11th Dec 19
Opinion Pollsters, YouGov MRP General Election 2019 Result Seats Forecast - 11th Dec 19
UK General Election Tory and Labour Marginal Seats Analysis, Implied Forecast 2019 - 11th Dec 19
UK General Election 2019 - Tory Seats Forecast Based on GDP Growth - 11th Dec 19
YouGov's MRP Poll Final Tory Seats Forecast Revised Down From 359 to 338, Possibly Lower? - 10th Dec 19
What UK Economy (Average Earnings) Predicts for General Election Results 2019 - 10th Dec 19
Labour vs Tory Manifesto's UK General Election Parliamentary Seats Forecast 2019 - 10th Dec 19
Lumber is about to rally and how to play it with this ETF - 10th Dec 19
Social Mood and Leaders Impact on General Election Forecast 2019 - 9th Dec 19
Long-term Potential for Gold Remains Strong! - 9th Dec 19
Stock and Financial Markets Review - 9th Dec 19
Labour / Tory Manifesto's Impact on UK General Election Seats Forecast 2019 - 9th Dec 19
Tory Seats Forecast 2019 General Election Based on UK House Prices Momentum Analysis - 9th Dec 19
Top Tory Marginal Seats at Risk of Loss to Labour and Lib Dems - Election 2019 - 9th Dec 19
UK House Prices Momentum Tory Seats Forecast General Election 2019 - 8th Dec 19
Why Labour is Set to Lose Sheffield Seats at General Election 2019 - 8th Dec 19
Gold and Silver Opportunity Here Is As Good As It Gets - 8th Dec 19
High Yield Bond and Transports Signal Gold Buy Signal - 8th Dec 19
Gold & Silver Stocks Belie CoT Caution - 8th Dec 19
Will Labour Government Spending Bankrupt Britain? UK Debt and Deficits - 7th Dec 19
Lib Dem Fake Tory Election Leaflets - Sheffield Hallam General Election 2019 - 7th Dec 19
You Should Be Buying Gold Stocks Now - 6th Dec 19
The End of Apple Has Begun - 6th Dec 19
How Much Crude Oil Do You Unknowingly Eat? - 6th Dec 19
Labour vs Tory Manifesto Voter Bribes Impact on UK General Election Forecast - 6th Dec 19
Gold Price Forecast – Has the Recovery Finished? - 6th Dec 19
Precious Metals Ratio Charts - 6th Dec 19
Climate Emergency vs Labour Tree Felling Councils Reality - Sheffield General Election 2019 - 6th Dec 19
What Fake UK Unemployment Statistics Predict for General Election Result 2019 - 6th Dec 19
What UK CPI, RPI and REAL INFLATION Predict for General Election Result 2019 - 5th Dec 19
Supply Crunch Coming as Silver Miners Scale Back - 5th Dec 19
Gold Will Not Surpass Its 1980 Peak - 5th Dec 19
UK House Prices Most Accurate Predictor of UK General Elections - 2019 - 5th Dec 19
7 Year Cycles Can Be Powerful And Gold Just Started One - 5th Dec 19
Lib Dems Winning Election Leaflets War Against Labour - Sheffield Hallam 2019 - 5th Dec 19
Do you like to venture out? Test yourself and see what we propose for you - 5th Dec 19
Great Ways To Make Money Over Time - 5th Dec 19
Calculating Your Personal Cost If Stock, Bond and House Prices Return To Average - 4th Dec 19

Market Oracle FREE Newsletter

UK General Election Forecast 2019

Greenspan the Maestro vs. the Market

Stock-Markets / Market Manipulation Nov 04, 2008 - 10:12 PM GMT

By: Ayn_Rand

Stock-Markets

Best Financial Markets Analysis ArticleAlex Epstein writes: Alan Greenspan claims that the free market failed to prevent the financial crisis, and that he is “shocked” that his professed “free-market ideology” turned out to contain a “flaw.”

But why should we take him seriously? Greenspan, while once associated with laissez-faire philosopher Ayn Rand, hasn't advocated genuinely free markets for decades. Remember, this is a man who for two decades reveled in being, as the New York Times put it, “the infallible maestro of the financial system.”


Free markets don't have “infallible maestros”; they liberate us from such “maestros”--the central planners who have time and again falsely claimed the ability and the right to orchestrate millions of economic lives. Free markets enable each of us to be our own maestro, conducting our own affairs, producing and trading as we judge best, and taking responsibility for the consequences when we fail.

Alan Greenspan's entire tenure at the Federal Reserve was one devoted to distorting market outcomes in the pervasively controlled financial markets, including the mortgage market. The Fed by its nature wields enormous power over the market as it dictates the money supply and interest rates, which in turn determine lending, borrowing, and bank leverage throughout the economy. Early in Greenspan's tenure, some expected the onetime opponent of the Fed and supporter of a gold standard to minimize the Fed's distortion of markets. Instead, Greenspan became our Manipulator-in-Chief, repeatedly inflating the money supply and artificially lowering interest rates to allegedly magnify prosperity. Further, he voiced no substantial opposition to related market-distorters such as Fannie Mae and Freddie Mac (which incentivized lenders to make trillions in loans that they wouldn't have made on a free market) and the cartel of government-supported rating agencies (whose absurd models gave AAA ratings to mortgage-backed securities).

Thus, when Greenspan speaks, he does so not as the voice of a (non-existent) free market in finance and housing, but as the voice of government central-planning--a voice with every incentive to blame the market rather than the Fed's market-distorting policies.

It is certainly not the voice of the Alan Greenspan who denounced the Fed and defended the gold standard in Ayn Rand's 1960s compendium Capitalism: The Unknown Ideal . That Alan Greenspan understood what free markets are, and explained how they encourage rational, self-interested behavior, so long as individuals were responsible for their own risks. He also explained how government handouts and bailouts reward irrational, destructive behavior. For example, when the government inflates the money supply and manipulates interest rates, it gives financial institutions new currency not backed by real assets, currency that gets funneled into certain sectors of the economy (such as dot-com stocks or houses), and creates artificial booms followed by catastrophic busts. Observe Greenspan's 1966 analysis of the boom preceding the 1929 crash: “The excess credit which the Fed pumped into the economy spilled over into the stock market--triggering a fantastic speculative boom.” Sound familiar? What would that Greenspan identify as the cause of the speculative housing boom at the center of today's crisis--the market or the maestro?

Greenspan is entitled to change his mind, of course; but it is intellectually dishonest to pretend that the market he manipulated for 20 years was genuinely free. And those questioning Greenspan's actions as Fed chief should not be asking him what he didn't do to prevent the financial crisis; they should be asking what he did do to cause the crisis by using his enormous power to reward irrational behavior. They should ask him how he can deny that his inflationary printing press, along with the housing welfare state, created the false promise of ever-increasing home values that was at the root of all the market irrationality--from “flipping” houses endlessly for fun and profit to interest-only “liar loans” for poor people to Wall Street's slicing, dicing, and gambling on dubious mortgage contracts.

If anyone wants to understand the free-market explanation of financial crises, they should read Ayn Rand, or Ludwig von Mises, or even Alan Greenspan of 42 years ago. But to listen to today's Alan Greenspan talk about free markets is like listening to a Chinese censor talk about free speech.

Nothing good can come, intellectually or politically, from blaming our problems on something that didn't exist--whether the mythical free market of the housing boom or Greenspan's mythical free-market ideology. Americans need to understand Greenspan's true nature as the bureaucrat manipulating the market so that we can investigate the government controls that are the real cause of the present mess, and save ourselves from disasters caused by an even less free market in the future.

By Alex Epstein

www.aynrand.org

Alex Epstein is an analyst at the Ayn Rand Center for Individual Rights. The Ayn Rand Center is a division of the Ayn Rand Institute and promotes the philosophy of Ayn Rand, author of “Atlas Shrugged” and “The Fountainhead.”

Copyright © 2008 Ayn Rand® Center for Individual Rights. All rights reserved.

Ayn Rand Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules