Alan Greenspan, former Chairman of the Federal Reserve (1987-2006), in my estimation is the leading culprit of the economic mess we are currently in. Greenspan's loose monetary policy and unbelievably low interest rates are what caused the lending standards to become much less stringent and invariably caused the housing bubble of 2004-2006 and the recession a couple of years later.
However, after reading Mr. Greenspan's writings from the mid-60's you'd never believe this is the same man.
In a piece he wrote in the Objectivist in 1966 titled "Gold and Economic Freedom", Greenspan lays out a perfect case fo gold and the dangers of an fiat monetary system.
Here he made the perfect case against the massive credit expansion by central banks and the bubbles that were produced since 1913. He also discusses historically how central banks have refused to raise interest rates because it is not "politically expedient". He uses the example of the Bank of England in the late 20's.
He also warned on the dangers of deficit spending where a central bank is the friend of the welfare and warfare (my words) state and how the same people who love deficit spending were the enemies and despised the gold standard. To quote Greenspan, "A substantial part of the confiscation is effected by taxation. But the welfare statists were quick to recognize that if they wished to retain political power, the amount of taxation had to be limited and they had to resort to programs of massive deficit spending, i.e., they had to borrow money, by issuing government bonds, to finance welfare expenditures on a large scale."
He also talked extensively on how gold is the only way to protect peoples savings from inflation.
This was an incredibly articulate and lucid thesis by the former Chairman. In my opinion he was right on. So what happened?
During his tenure as Fed Chairman, he ignored every principle he espoused decades earlier. Was it the pressure, the politics, the President(s)...only he knows for sure.
One thing I am pretty positive of is Mr. Greenspan knows in his heart the damage he has caused because at one time he did know better.
To read "Gold and Economic Freedom" check this link: http://www.constitution.org/mon/greenspan_gold.htm
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