Today this discipline is called econometrics, but then the field was just an assemblage of general concepts, too new to have a textbook or even a name…. I immediately saw the power of these new tools: if the economy could be accurately modeled using empirical facts and math, then large-scale forecasts could be derived methodically, without the quasi-scientific intuition employed by so many economic forecasters. I imagined how the could be put to work. Most important, at age twenty-five I’d found a growing field in which I could excel.
Although Greenspan would later discover the limitations of forecasts based on econometric models, he would use his mastery of economic statistics to develop a successful private business (i.e., providing useful economic statistics to businesses), and later to establish himself as the most important economist in the Republican Party (which is why Reagan appointed him as Fed Chairman in 1987). So mathematics and statistics were the making of Greenspan. In places where such tools are useful and necessary, Greenspan was a consummate master. The problem is, mathematical statistics is a mere tool for acquiring economic facts: it does not, in and of itself, provide any understanding of those facts. Indeed, it predisposes one against understanding them by placing too much emphasis on calculation and technique rather than on understanding and “quasi-scientific” intuition. It causes economists to unwittingly regard the economy as a mechanism instead of a complex outgrowth of cooperating and clashing human motivations. Regarding the economy in this manner predisposes free-market orientated economists to accepting the errors of monetarism, particularly two beliefs that have governed the Fed’s monetary policy during Greenspan’s reign: (1) that the role of the Fed is to maintain price stability in consumer goods; and (2) that any crisis in liquidity (i.e. deflation) can be solved by merely increasing the monetary supply.
Greenspan and his colleagues at the Fed, by holding fast to these principles, failed to understand what was happening in the nineties. Specifically, they failed to appreciate how the deregulation of the eighties, by encouraging dangerous experiments in high finance, particularly in derivatives and debt leverage, had resulted in a massive credit bubble that had swollen asset markets to a very dangerous extent. Greenspan appears to have had an inkling that something was wrong in 1997 when he made his famous “irrational exuberance” remark. But he was either unwilling or unable to do anything about it. He would later claim that bubbles were impossible to identify until they burst—an obvious testimony to the poverty of Greenspan’s economic understanding.
What could Greenspan have done differently? What was his major policy error? His major error was not to have recognized the credit bubble in the nineties, when it could have been safely deflated. To be sure, he may not have been able to do anything about it: after all, the Fed chairman is not a dictator, but merely one vote among seven colleagues. Moreover, due to the increasing ability of non-banks to expand credit, the Fed was losing control of the money supply in any case.
Curiously, Objectivists like Richard Salsman have criticized Greenspan for raising interest rates and tightening monetary policy in 2000. “ Last week, for example, Greenspan told Congress that he'll keep raising interest rates,” Salsman wrote in March of 2000. “In response, the stock market plunged nearly 3%—meaning that about $400 billion of wealth was destroyed. We have only Greenspan to blame for the drop, because there's nothing wrong with the American economy.”
This is, of course, palpable nonsense, and demonstrates that Salsman’s understanding of economic reality is, if anything, even worse than Greenspan’s. As I wrote at the same time (in March of 2000):
The stock market is vastly over-inflated. It has risen by a factor of the more the six in the last twelve and a half years. Now what economic fact could possibly justify so immense an increase? No amount of rise in productivity, Gross Domestic Product(GDP), research and development, corporate profits, or stock dividends can possibly justify a six-fold increase in the stocks. To believe that the current stock market reflects the genuine economic realities of the present economic situation is to demonstrate a blindness equalled only by investors during the other great speculative euphorias in history.
Now how did I know, in March of 2000, that the Stock Market was grossly over-inflated? It’s really quite simple: I merely applied intelligence and the lessons of history to the economic facts. When the Stock Market goes up by a factor of six, there’s something seriously wrong. You don’t have to be a great mathematical economist to figure that out. So why did Greenspan and Salsman get it wrong? With Greenspan, I think (as I have explained) it had a lot to do with his mathematical training, which predisposed him to accepting mistaken monetarist notions. With Salsman, it is his commitment to ideology, which makes him sacrifice truth to advocacy. Hence the absurdity of his criticism of Greenspan. He is not interested in understanding Greenspan: he merely wishes to find a rationale for abusing the former Fed chairman because the institution of the Fed violates Salsman’s tender ideological scruples.
27 comments:
Cool. I will certainly be writing to Mr. Obama to make him aware of the genius of Mr. Nyquist. I urge others to do the same.
The entire world economy having been destroyed by a guy who Rand once liked, and later repudiated, and whose actions had nothing to do with Objectivism, and Mr. Nyquist having now proved smarter than all these people, Mr. Obama would be crazy to not consider this double opportunity: he could recruit an obsessed Rand hater (no matter that he is actually wrong on Rand all the time, it does not matter) in order to inoculate the collectivist regime form ever touching upon her ideas again, plus tap the brilliance of an economic giant who's advice should have been followed eight years ago.
I hope everyone reading this will nominate Mr. Nyquist to Mr. Obama.
Sincerely yours as a hysterically laughing member of the Objectivist Rabble,
John Donohue
Pasadena, CA
John,
His take on the late 90's bubble seemed pretty solid to me. What did you disagree with?
I'm still not getting what any of this has to do with Objectivism..
Also, on the point of Salsman, I'm beginning to get the idea that he is not universally beloved in Objectivist circles - that is, he makes some pretty damn wrong claims, which Objectivst economists disagree with. So, I mean, just because he's an Objectivist, don't just assume anything he says is the 'party-line'.
BTW, what's the source for that quote from Salsman? I mean only someone on the level of these guys would say at any point since the creation of the Fed that 'there's nothing wrong with the economy':
http://www.youtube.com/watch?v=2I0QN-FYkpw
John's comment sounds like a severe case of sour grapes.
JayCross: "His take on the late 90's bubble seemed pretty solid to me. What did you disagree with?"
Who's take, Nyquist or Greenspan?
Notice that Nyquist does not comment on what Greenspan actual ended up doing. Nobody does, everyone is in denial, insisting that Greenspans Mortal Sin As A Randian was to allow things to go along unregulated, keeping "hands off." So how does that square with the fact that Greenspan, in an effort to put the dot-com boom under his thumb, raised interest rates six times between May 1999 and mid-2000, destroying both the boom, which then got "socially reconstructed" into being called a "bubble". As an "I don't care who else suffers" consequence, this blunt instrument also destroyed the surrounding prosperity gains due to productivity surges from the 1990s. The economy tanked. The events of 9/11 then take the blame for the subsequent early decade doldrums and Greenspans crude hammer blows of activism are fogged out.
Nice job! I welcome any and all attempts to find the paw prints of Ayn Rand on that!
Was a lot of the dot-com excess excessive? Were a lot of the startups vapor? Yes. Objectivism says that under a real capitalistic economy such foolishness would never have cropped up, or if it did attempt to grow would have been devoured by the brutal sharp edge of unmitigated reality. Also, however, startups that were legitimate, that did have a chance to become permanent productive corporations would not have been flushed down Greenspan's toilet. Also, the need to arrest the entire economy in order to stop the wildness of one small sector would not be possible or arise at all.
Anyone could have written what Nyquist just wrote, with hindsight, about the 1990s. Other analyses could also be pasted on the events just as logically. So what? There is no brilliance in it, which is why my comment was sarcastic.
By the way, I WROTE about the Greenspan stupendous blunder in November 2000. Maybe I SHOULD get the glory!
http://jrdonohue.com/commentary/greenspan1.html
What is now being avoided in this discussion is this: It is completely against all aspects of Objectivism for there to even BE a dictator of the economy, a nationalized fiat money system backed by nothing except the promise to tax the hell out of your children, or indeed any sort of command and control mechanism powered by the guns of the government.
Objectivism just laughs at those who try to pick out what aspects of it's philosophy are to blame for this in the current fascio-statist system and that in the supposed free market. We are not on stage, in the least degree.
For instance, if Nyquists 'brilliant' analysis of what happened in the economy and what Greenspan "should have done" were indeed spot on, we have no assurance it would have "worked." At best, this system serves to pound down any nail that sticks up too far and pulls up sufficient mediocrity while being at pains to keeping the pot at a slow simmer, a pale echo of true capitalism. How can Mr. Nyquist assure us that his proscription for tamping down the economy would not have repressed innovation and risk taking to the point of stagnant grayness? Would you prefer that?
Obviously there is overwhelming support in this gray-loving culture for the constructed belief that command and control of capitalism by government with a head-dictator at the helm is wise and wonderful and workable.....as long as we have the proper dictator in place. Well, Mr. Obama certainly believes he is co-dictator and he is pawing through the past administrations for inside operatives to put in place. Maybe he can find someone from the Ford/Carter years to run the wonderful system we have.
Meanwhile, as one poster above wonders......what has this to do with Objectivism and Ayn Rand?
John Donohue
Pasadena, CA
John: "The entire world economy having been destroyed by a guy who Rand once liked, and later repudiated..."
She did? When was this? I know of no such repudiation during Rand's life, and I find it grossly implausible to think that Rand has repudiated Greenspan from beyond the grave. As a matter of fact, Rand appears to have cut Greenspan more slack than she did other members the so-called collective, probably because Greenspan, unlike the other members of the collective, had achieved something on his own in the world of business, which Rand respected. Rand was also at Greenspan's side when Greenspan was sworn in as chairman of the council of economic advisers in 1974—a remarkable gesture on both their parts.
If Rand had repudiated Greenspan before she died, why did her intellectual heir Leonard Peikoff wait until the late nineties to do likewise? In the fall of '87, right after Greenspan became Fed chairman (many Objectivists were quite excited about this at the time), Peikoff said that, although he didn't think Greenspan could accomplish much as Fed chairman, he still regarded Greenspan as a friend and he merely hoped that Greenspan would be able to, as Peikoff put it, "keep the lights on."
You have a right to contend only one small point in my entire excoriation of this post and this thread, naturally.
I have an answer, but am too bored to respond. I'll wait until you attempt to counter one of my essential points. If you ever do.
John Donohue
Pasadena, CA
John: "Meanwhile, as one poster above wonders......what has this to do with Objectivism and Ayn Rand?"
Given Objectivists penchant to find come threads between seemingly disparate concepts, this is a puzzling objection. The post is primarily about the Objectivist reaction (or, rather, over-reaction) to Greenspan's befuddlement at the current economic debacle. John's comments provide an excellent example of this, particularly his implication that the Fed chairman is a "dictator" of a "collectivist regime." I don't know who he thinks he's going to convince with such kind of rhetoric. The Fed chairman is not an economic dictator, nor is the United States a collectivist regime. The Fed is not even a fully public institution: neither the President nor the Treasury has direct control over it. If the board of governors were appointed by leading bankers rather than the President, would the Fed chiarman still be a "dictator." Or is it because the Fed is the government's bank? But the government has to do banking in any case. If there was no Fed, the government would have to do its banking at a private bank. Yet whichever bank got the government's business would have an inoridinate influence over the rest of the banking system just as the Fed does today. It wouldn't have the same control over the discount rate, but the government would still be able to manipulate the banking system through buying or selling government securities to banks (i.e., Open Market Operations). Indeed, it would be a worse situation, because the Treasury, under the authority of the President, would control these operations, rather than an independent institution like the Fed. And anyone who thinks the executive branch would not use its influence over the banking system as a way to affect monetary policy has got to be exceedingly naive. The Fed presents an easy target for ideologues. But it's much more difficult to come up with something that wouldn't be worse.
John: "Notice that Nyquist does not comment on what Greenspan actual ended up doing. Nobody does, everyone is in denial..."
Everyone is not in denial. By the late nineties, the Fed had lost most of its control over the economy. The system was completely out of control: non-banks were producing credit en masse, most of it based on leveraged debt, and Greenspan and the Fed were desperately trying to keep things from getting out of hand. Here's how Doug Noland, who figured out what was going on long before anyone else, wrote in Sept. 1999 about the economy:
"That’s how we see it today…a highly unstable and acutely vulnerable financial system with a maladjusted economy. Years of putting 'coins in fuseboxes' has fostered a financial system hopelessly distorted by endemic over-leveraging and speculating, and an economy addicted to credit excesses and rising asset prices, not to mention our dependence on a flood of imports to sustain our standard of living. Our system has created too much paper, of increasingly poor quality, while incorporating unfathomable leverage. To make this worse, much of this leverage is a mountain of accumulated debt owed to our foreign creditors. This is truly a 'house of cards.' Immediately, I see this situation creating an acutely vulnerable dollar. I also see potential dislocation in the interest rate derivative area that has ballooned along with financial credit."
Incidentally, this analysis is pretty much along the lines of those advocated by Austrian economics, except for one important difference: Noland doesn't believe (as Austrians, Objectivists, and Greenspan all do) that derivatives should be unregulated. In other words, he is not a laissez-faire ideologue, but merely accepts what aspects of those creeds are in accord with reality.
So what is the lesson from all this: namely, this—that the economy in the late nineties was not in good shape and that the Fed governors, finally catching on to what was going on, were trying to affect a "soft landing." Salsman complains of $400 billion of wealth being destroyed, but that was all paper wealth largely based on bad debt. As for John's comments about the repression of innovation, I find it rather ironical that he should take such a position given his earlier advocacy of 100% reserve requirements. If the Austrians are right, the lack of reserve requirements would lead precisely to "stagnant grayness" that John complains of. But while I don't have any problems with the dynamism of capitalism that spawns the trade cycle, I believe it's unwise to take the whole thing to unpalatable lengths. There was plenty of opportunities on the early nineties for entrepreneurs to do their thing. By 1996, it was obvious things were spinning out of control. The market had gone up by a factor of three by that time in a space of nine years. There is no economic justification for that. Where do you think the money came from to force the market that high? If it came from the rest of the economy, we would have had deflation—so it didn't come from that. So where did it come from? Did the economy grow by a factor of three? No. Did it come through Open Market Operations of the Fed? No, not entirely. So where did most of the money from? From credit creation, much of it from non-banking (i.e., non-Fed) institutions. Now credit creation is tantamount to debt creation, because debt is merely credit from the other side of the ledger. The economy that Greenspan supposedly interfered with was built on the mirage of irresponsible debt, at least partially manufactured by financial capitalism, the least regulated area of market capitalism. As Noland puts it: "This massive credit creation provided excessive liquidity that quickly manifested into asset inflation as wild speculation drove the historic Internet mania, as well as a doubling of technology and NASDAQ indices. Egregious credit excesses have clearly distorted the market pricing mechanism. And with our over-zealous financial sector creating all this money and credit, there appears absolutely no need for households to save."
John: "Objectivism says that under a real capitalistic economy such foolishness would never have cropped up"
Given the role of derivatives and non-banks in creating all the excess credit, this is not a plausible assertion. Did bad government laws, particularly by promoting "moral hazard," contribute to the mess? Yes, they most certainly did. But you're simply not facing up to reality if you think that credit excess and wildcat financing can't take place in a so-called "laissez-faire" economy. We have historical examples of such things occurring before the establishment of the Fed (when there was virtually no interference in banking).
Was a lot of the dot-com excess excessive? Were a lot of the startups vapor? Yes. Objectivism says that under a real capitalistic economy such foolishness would never have cropped up, or if it did attempt to grow would have been devoured by the brutal sharp edge of unmitigated reality.
Objectivism may say it, but that doesn't make it so. There have been plenty of bubbles in capitalist economies. The tulip mania in Holland and the South Sea Company bubble in England are two famous cases. The latter instance pretty closely parallels the dot-com bubble. After the initial success of the South Sea Company, many vacuous start-ups were launched in imitation of it. How vacuous were they? One of them advertised for investors by describing itself as "a company for carrying out an undertaking of great advantage, but nobody to know what it is."
It's true that these start-ups were eventually "devoured" by "reality." So were the dot-coms. But both times, the devouring did not take place until vast damage had been done. This is in the nature of a speculative bubble, and nothing in Objectivism rules it out - unless one assumes that under Objectivism people will be too rational to ever lose their heads.
Charles Mackay's Extraordinary Popular Delusions and the Madness of Crowds (1841), which is in the public domain and can be found online, covers the gamut of speculative manias in an entertaining way.
So where did John Donohue go? Did he get bored again?
I am wondering what a "real capitalist" economy is according to Objectivist ideology? Free banking on a gold standard I suppose.
Which would of course comes with its own set of problems and limitations. So I see a comparison of Rands economic theories, borrowed of course from the Austrians, against the actions of Greenspans tenure to be largely fruitless. Considering Greenspan was operating in an entirely different structure of economic theory. Repealing Glass Steagall was a significant error in the context in which it occurred. In a free banking system, well, who cares, everyone sits on their own ass.
But its not primarily about the influence of Objectivist economic theory (if such a thing exists) on Greenspan, but about his technocratic rationalizations, which were totally devoid of any pragmatic humanism, which does have Rands paw prints all over it.
Rational self interest may be a sufficient regulator for a stand alone institution in an isolated and fragmented system. But this overly rationalistic dogmatism fell flat on its face in the real world.
Possibly Greenspan was this way inclined before he met his confirmation bias wearing a dark dress with a dollar sign broach.
Andrew:
>In a free banking system, well, who cares, everyone sits on their own ass.
In a true free market, everything that happens is the right thing! Every boom is a just and righteous boom, every crisis is a just and righteous crisis! With government removed, there are no economic problems! We all return to the original state of nature, and all economists are out of a job...;-)
Daniel Barnes:
> In a true free market, everything that happens is the right thing! Every boom is a just and righteous boom, every crisis is a just and righteous crisis! With government removed, there are no economic problems!
... And?
Don't worry, I am not going away. I only have a small amount of time to spend swatting flies, however. And being good Revolution Rabble, I hide behind trees and snipe away here and there as I please.
The answer to all your incorrect takes on free market capitalism, gold standard, non-fraudulent honest reserve banking is this: you can twist in the wind all you want and either claim Greenspan did it or didn't do much of it. The cold reality is: compared to the puny supposed free-market blow ups cited, this one and the "Great Depression" -- which were failures of collectivist financial systems -- are near extinction-level events.
I have not studied the famous Tulip mania et al; the chances that vast billions of humanity were devastated by them, or that there was no govt/cartel involvement, I predict, are slim.
You have never experienced an economy where risk was born by the value creator. Instead you are seeing the collapse of a gamed system fueled by impossible government-spawned funny money chased and hoarded and wasted and derivatived by non-value-creating slime that real capitalists would eat for lunch.
In your ignorance you claim real capitalism would be stagnant and gray. Don't worry, it is not in the offing. You'll have plenty of excitement and vivid colors watching the Establishment attempt to keep its fascio-collectivist system afloat by throwing in more sacrificial victims.
Thank God Ayn Rand's hands are clean of it.
John Donohue
Pasadena, CA
Just on the wiki, in the first paragraph which duly notes that there is a lot of doubt about the actual facts of the Tulip Mania, one of the possibles is the following, which is so par for the course....
"The high prices may also have been driven by expectations of a parliamentary decree that contracts could be voided for a small cost—thus lowering the risk to buyers."
I am not saying that actually happened. But that is the TYPE of thing that happens all the time...but 'capitalism' or 'Ayn Rand' still gets the blame!
John Donohue
Pasadena, CA
I think the free market argument is not that there can't be speculative bubbles nor that these bubbles can't do a great deal of harm, but that they can't create a system-wide collapse like we have now.
Lots of shareholders and employees got hurt due to the 1998-2001 internet bubble, but it didn't create a great depression.
I discussed Greenspan on my first ARCHN guest post --
http://aynrandcontrahumannature.blogspot.com/2007/10/rand-on-compromise.html
Neil: "I think the free market argument is not that there can't be speculative bubbles nor that these bubbles can't do a great deal of harm, but that they can't create a system-wide collapse like we have now."
No, that is not the free market argument. The free market argument is that in non-fraudulent voluntary transactions, for the government to be involved in any way shape or form is an intrusion of physical coercion and therefore a violation of individuals' rights by the very government supposed to defend them from such aggression. By the same principle, the government cannot be deployed for leverage by parties involved. The free market argument is not the pragmatic 'lesser harm' statement you made, but rather this: lift up the rock of a 'bubble' and you will find the fingers of government. Get those fingers out of enterprise.
My contention is: really, how far would substantial 'speculative bubbles' get under the paradigm I am painting? People would be free to attempt them. But not being able to 'get an edge' through pull with government, and investors truly risking their own money, their hard-earned gold money, how much traction would wild speculation get?
John Donohue
Pasadena, CA
But not being able to 'get an edge' through pull with government, and investors truly risking their own money, their hard-earned gold money, how much traction would wild speculation get?
How much traction did speculation get in the South Sea Company mania?
Booms and busts are inherent in capitalism, and are more severe in unregulated capitalism. Our economy is much more stable today than it was in the 19th century, when "panics" were common. And in a laissez-faire world, without FDIC insurance and a social safety net, you could be totally wiped out by a panic at a moment's notice, through no fault of your own.
Mr Prescott, every assertion in the post you just made is completely wrong!
Moreover, I already did a tiny bit of research on one of the two incidents being floated as crashes caused by capitalism and found out a high likelihood it was not caused by capitalism at all but rather by a fiat voiding of contract by a government! If you want to know about the other one do some of your own research.
John Donohue
Pasadena, CA
every assertion in the post you just made is completely wrong!
No one can seriously dispute the fact that financial panics were more common and more severe in the 19th century than in recent times. And without a social safety net, if you were wiped out, you were really wiped out. Or do you think all those folks in debtors' prison went there for their health? (Maybe all those starving street urchins just liked the outdoor life.)
As someone once said, Objectivism is bluster, buttressed by abuse of all critics.
Ah.....yea I am seriously disputing it. Not only am I disputing that things were more panicky in the 19th century, I am stating something stupendously more important, something you keep stonewalling: Where is your list of 19th century panics -- or any panics -- caused by free market capitalism? I am waiting for that list. By the way, if the Panic of 1873 and 1893 ends up on your list, I would forewarn that to blame them on the capitalism as championed by Ayn Rand will be challenged sharply.
John Donohue
Pasadena, CA
___________________________________
The free market argument is that in non-fraudulent voluntary transactions,
for the government to be involved in any way shape or form ... - John
-----------------------------------
is an intrusion of physical coercion and therefore a violation of
individuals' rights
by the very government supposed to defend them from such aggression. - John
___________________________________
Who decides individual's rights in a free market?
___________________________________
By the way, if the Panic of 1873 and 1893 ends up on your list, I would forewarn that to blame them on
the capitalism as championed by Ayn Rand
will be challenged sharply. - John
___________________________________
Who decides individual's rights in the capitalism as championed by Ayn Rand?
I believe that the important point here is not that bubbles are impossible under a free market system (something that Rand never said outright) but rather that they are brutally corrected in consumer experience, as they know that the government won't race in to save them from their mistakes.
Without a blank check on your mistakes, you watch where you are walking.
This attitude produced by the free market keeps people within the 'bubble' (ha ha) of knowing that they risk taking their own falls.
In other words; mortgage your house and lose, and you will be homeless. How many people end up homeless because of capitalism?
I'm not sure; as capitalism has never been ALL the way attempted. I assure you, however, that government intervention into everything from banks to the creation of veterans through Mercantilist policies towards war have generated the homeless at record rates.
If you want a solid attack on Ayn Rand; there are plenty. Personally, I love the woman for her tenacity and how often she was right.
If you want to kick her in the throat, however, go after her Nate Branden affair, or her ideas on invading non-capitalist countries as being justified, or idiotic ideas on hero-worship. Did I mention romanticism?
I find all of those things to be both personal and philosophical flaws (two things she refused to separate), but you people are here splitting hairs on Greenspan- someone that clearly sold out in the hopes of getting a little extra money.
Now that he's old, I hope it was worth it.
Happy Thanksgiving, everyone. I hope you all have a great and relaxing day!
Not only am I disputing that things were more panicky in the 19th century, I am stating something stupendously more important, something you keep stonewalling: Where is your list of 19th century panics -- or any panics -- caused by free market capitalism? I am waiting for that list.
Ask and ye shall receive. Of course you could have just Googled "19th century" + "panic."
Anyway, here's a Web page listing all the major panics of the 19th century. Note that "minor" panics are not listed. Panics were so common that the site can't list them all.
Note the reasons given for these various panics:
- a collapse in cotton prices.
- the failure of a wheat crop, a collapse in cotton prices, economic problems in Britain, rapid speculation in land, and problems resulting from the variety of currency in circulation.
- the failure of the Ohio Life Insurance and Trust Company ... reckless speculation in railroads led the company into trouble.
- rampant speculation in railroads. The stock market dropped sharply and caused numerous businesses to fail.
- the New York stock market dropped sharply, and in late June panic selling caused the stock market to crash. A severe credit crisis resulted.
Now, look. I understand how this silly game is played. You'll say that because government played some kind of economic role even in the 19th century, government is responsible for all problems and "real capitalism" is blameless. This is nothing but verbal sleight-of-hand - defining "real capitalism" as "a system that cannot cause panics" and then asserting that any panics that did occur must have been caused by something else. QED!
As a debating tactic, it's not too bad. But as a means of getting at the truth, it's no good. Truth is not a matter of the words you use. That's the whole problem with Rand's philosophy, as spelled out in detail in Greg Nyquist's book. Rand thought she could define problems out of existence, but reality is not so malleable.
if the Panic of 1873 and 1893 ends up on your list, I would forewarn that to blame them on the capitalism as championed by Ayn Rand will be challenged sharply.
Challenge away, but don't expect a response. Verbalistic gymnastics bore me. Facts are facts, and the facts show that panics caused by speculation occurred frequently in the 19th century - an era of much less government regulation than today. Spin it any way you like, but it's still going to be true, and Ayn Rand is still going to be wrong.
An interesting question would be: How much did Rand's "greed is good" philosophy contribute to the corporate excesses that precipitated the current meltdown? I don't just mean Greenspan's role. I mean, how about all those exes who until recently were proudly quoting Rand to justify their predatory policies?
See this article:
“I know from talking to a lot of Fortune 500 C.E.O.’s that ‘Atlas Shrugged’ has had a significant effect on their business decisions, even if they don’t agree with all of Ayn Rand’s ideas,” said John A. Allison, the chief executive of BB&T, one of the largest banks in the United States.
Fast-forward to November 26, 2008:
BB&T, the largest bank in West Virginia, announced on Oct. 27 it would receive $3.1 billion in federal rescue plan money.
And with that I say: Happy Thanksgiving to all, and to all a good-night!
This fellow who blames Greenspan RAISING interest rates a few times for anything obviously is either no Objectivist or has no understanding of what the Fed interest rates are. Raising interest rates at the Fed means the Fed loans less subsidized money. The goal of any consistent Objectivist for the Federal Reserve, until and unless it is abolished, is to ensure that it raises all rates so high no one will ever borrow from the Fed. And also probably to raise the reserve requirement, as long as the FDIC exists and unless it becomes common practice for a depositor to be told outright there is no guarantee of their funds being returned if anything goes wrong.
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