Greenspan: The Man Who Does the Opposite

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http://www.safehaven.com/article-2014.htm

 

I usually do not like to comment on Greenspan since he seems to take up almost all the space in every newspaper and magazine in America than he deserves to. I can safely bet that virtually no article on finance in a news source anywhere in America will fail to mention his name and what he thinks about the subject of the article. This may sound stunning to those who were born outside America and live here or those who still live elsewhere. But it is wholly descriptive of the situation we find ourselves in with a pliant and celebrity-driven US media these days.

 

Whether it is home building or stock markets or a plain shopping tip, if the article talks about finance, the writer usually finds a way to weave Greenspan into it. Even if he/she has some backbone enough to buck the trend and not mention him, there is a good chance that his/her editor will write back with a note wondering "what Greenspan has to say about this subject".

 

This kind of mania for a Central Bank employee is unusual for America. But I guess the press here treats him like a Demi-God whose every utterance is important. It is also a fact that Greenspan tends to talk about every subject under the sun related to finance, so journalists have a wealth of quotes to choose from a man who seems to suffer daily from verbal diarrhea (unlike some of us who have it only once a week!).

 

But there are times where I think Greenspan pauses to think about what he says and actually says it. Based on what people consider his most important quotes or speeches, I think I have found a pattern in his speeches that can lead us to predict his actions.

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http://www.safehaven.com/article-2155.htm

 

Richard Russell of Dow Theory Letters has written, "Alan Greenspan...of all people knows all about the Federal Reserve and money and gold. For this reason, I consider him one of the great 'sell-outs' of today. Not only has Greenspan headed the Fed but he turned out to be the greatest inflationist in American history."

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By the time Greenspan became chairman of the Federal Reserve; he had fully removed himself from his sound money principles and turned to running the printing presses at full capacity. The final straw was broken in 1995 when Greenspan sold out to Bill Clinton's artificially strong dollar policy in exchange for an appointment to a third term. Greenspan's sell-out, which contributed to the bubble in the late 1990s, helped re-elect President Clinton. Greenspan, in addition to getting a third term, became a supernatural being to those on Wall Street and a cult hero to millions around the world. Such godlike status can be quite addicting, and create a self-fulfilling prophecy that one's policies are actually working no matter how warped they are.

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A few very interesting questions have popped up in circles around Wall Street and Washington over the last few months: If he had to do it all over again, would Greenspan have gotten out of the game (with Bob Rubin) at a time when he could've exited with his reputation unscathed? Does Greenspan realize that his fate as a "modern day John Law" awaits him in the history books? Will the White House name a new Fed Chairman immediately after the election since the law forces Greenspan to retire after 2005?