Atlas Is About To Shrug: Analysis of Alan Greenspan; Is He Evil? Is He A Genius? Or Both?

This week I spent several hours in my library perusing a number books I haven't looked at in years. One in particular I want to comment on is by Ayn Rand, called Capitalism: The Unknown Ideal. It's a brilliant collection of essays about the economy that are as relevant today as they were in the 1960's. One essay in particular was written by a much younger Alan Greenspan called "Gold and Economic Freedom" in which he writes:

"The abandonment of the gold standard made it possible for the welfare statists to use the banking system as a means to an unlimited expansion of credit." He goes on to say: "The holder of a government bond or of a bank deposit created by paper reserves believes that he has a valid claim on a real asset. But the fact is, there are now more claims outstanding than real assets." He concludes by saying: "In the absence of a gold standard, there is no way to protect savings from confiscation through inflation."

In my opinion, Sir Alan Greenspan had it right when he wrote this article in the 1960's. But he had it really wrong in practice when he ran the Federal Reserve for 18 years. Perhaps he had a senior moment, you know, a lapse of memory,  that lasted for 18 years. Or perhaps he was trying to set the stage for a global economic collapse. Just like in the book Atlas Shrugged where John Galt said: "I will stop the motor of the world."

Whether it was by choice or by chance, Alan Greenspan helped lay the foundation for stopping the economic motor of the world. An achievement that will become painfully obvious in the coming months and years. He did it by flooding the world with monetary inflation during the dot-com run up in the 1990's. He did the same thing with the housing run up in the first half of this decade.

He did it with confidence and sincerity. By talking circles around politicians and policy makers. By exploiting the full faith and credit of the United States of America.

Is he a genius? Is he evil? Or is he an evil genius that will be praised by history as the man who helped reset the global financial system so we could start over? Only time will tell. But getting there will NOT be half the fun.