Alan Greenspan, Angel or Demon
Allan Greenspan prior to governmental service was an Ayn Rand disciple, and for anyone who knows of her writings, her beliefs were as far from socialist or Keynesian as is possible. His own writings early in his career showed nothing but support for sound money and the gold standard. When Ronald Reagan appointed him as the Chairman of the Federal Reserve, prominent Keynesians nearly had a panic attack at the thought of a ‘gold bug’ heading the institution. Greenspan made comments during Federal Reserve meetings about leasing gold to alter perception of the dollars value. While this may appear like blasphemy to those who believe in free markets, it also shows his understanding of golds role as a “yardstick” as he described it at the time, that all currencies are measured by. More recently he has come out and said gold is the currency that “no other can match”, and that gold price would be “markedly higher in the future”.
We could, and many do, explain these apparent contradictions between his origins, comments, and actions, as a man who abandoned his convictions when he rose to power, and is now attempting to buy back his soul. While this is certainly possible it is hard for me to not at least question. This is a man who seemed to live these contradictions with no inner turmoil and still describes himself as a “life-long libertarian”. He may just be a sociopath but there is another explanation that seems to make more sense.
I asked myself the question; why would a man who according to many of his writings and statements held very similar beliefs to my own, follow the path he did while the Fed Chairman? My first thought was if I held that position I would attempt to get the economy back on a sound money standard as soon as possible. Thinking of that path quickly hits a dead end. In implementing such a system the transition would be painful, and no matter how well planned, there would be unforeseen outcomes. Debt would have to be restructured, much of the financial industry would be destroyed, and the plans and preparations of much of the country would have to change. There would be intense political opposition to such a plan and the shift to a sound monetary system would likely lack essential follow-through. My goal likely would not be reached, and the blow to ‘real’ economics would be devastating.
A plan with a more likely path to success is to let the current system destroy itself and rebuild from the rubble. The current debt based monetary system while very flawed maintains most Americans at a relatively high standard of living, and while we know that when it fails this could change overnight, it would be difficult to convince the general public this is the case before it happened. On the other hand if policies were followed to ‘support’ the current system to the point where there was an udder and complete collapse, a new sound money system could be implemented and general population would see it as necessary. Supporters of Keynesian economics would be politically and ideologically destroyed with their theories once again dis-proven, only this time on a much larger scale, and would have no room to rebut.
There is certainly a thorn in the side of this plan…the collapse. An uncontrolled collapse could still result in turmoil that could take generations to recover from. That said we also know from history that a society can come from utter economic ruin to a world power in very little time. Unfortunately the piece of history I take that from is the time before World War Two. Germany experienced a horrible hyperinflationary depression and later saw the worst of the great depression, yet within years became such an industrial powerhouse they were able to challenge the world in the worst possible way. Even after complete collapse a nation can bounce back in very little time, but it also can allow the worst among us to rise to power. The United States, along with the rest of the world is in a very precarious economic situation. This along with an unprecedented arsenal makes an economic collapse a very dangerous outcome.
I think it is a possibility that there are those at the highest levels of power, such as Alan Greenspan who understood that the only way to fall back on sound money would be for the current system to collapse allowing the political capital necessary for such a shift. They also might have known that without help that collapse may have taken countless decades to occur leaving it in the hands of an unknown government. He/they may have concluded the collapse would need a helping hand hence the policies that seem to contradict everything Greenspan once stood for. He may have been helping the system he hated fail.
Even with a helping hand the debt based monetary system would not fall overnight which left a few decades to plan for the thorn of collapse. Under this theory, the time waiting for collapse would not be spent idly. Extensive planning, research, and even tests could be implemented over time to allow for a seamless transition to a new sound monetary system. When the collapse occurred the new system could be put into practice without much damage to the real economy, and its long term future much brighter.
It appears as if our community often sees flaws and injustice and believes it is us against them and ‘they’ are all evil. We should certainly plan as if this is the case, but it may not always be accurate. After reading much of Alan Greenspan’s work, I would like to think that selling his sole may not be the only explanation for his life.
This post is pure speculation, in the present vernacular a conspiracy theory. Here are my thoughts on conspiracy theories.