Thursday, November 7, 2013


In a Bloomberg article today, former Fed Chairman Alan Greenspan says that Janet Yellen, Obama's new proposed Fed Chair, was his primary inspiration for monetary and economic policy, presenting him regularly with "various new theories /that/ were coming up and the like in academia". Greenspan was and is so entranced with Yellen's "new theories" and "academia" that he fully endorses his beloved inspiration source as the next Fed Chair. 

But do these people ever consider that the latest fad and "new economic theory" may be WRONG? That it may be incomplete? That it may even be destructive? That it may bring a disaster? Does it ever occur to them that these "theories" may be overly simplistic, or that they may ignore the complexities of millions of people acting independently, and often irrationally (contrary to the latest "theory")? NO! To them, it's just a new toy or tool to use on US and the US economy as their latest guinea pig to experiment on!

"Greenspan's put", as it was called at the time, was likely the primary cause of the housing bubble, and when it collapsed, the housing crisis and resulting Great Recession. But does he show even a hint of remorse for what he did? No!

How many people lost their jobs and therefore livelihoods because of the Greenspan/Yellen penchant for playing with the latest "new economic theory" that resulted in catastrophic collapse? How many people lost their homes? How many people's lives were ruined because of his obsession with the latest economic toy from the ivory towers of academia? Greenspan is still in denial of his mistakes and the resulting chaos he brought. Worse still, he is unapologetic, and thinks that Yellen, his economic playmate in his science experiments, should now be empowered to play with us, by putting their pattycake experimentation on steroids!

We should remember that theory is not proven reality, but Greenspan became so dependent on Yellen presenting him with the latest THEORY -- unproven by time, peer review, or experience -- that he gleefully accepted all those new theories and would often use them to experiment on the US economy!

I've said before that these Fed execs are like a bunch of teenagers who received a chemistry set for Christmas, and are so blind to their power that they keep experimenting with the chemicals until they blow up the house! 

I remember in the 1970s occasionally hearing news stories about teens who received chemistry sets from their parents for Christmas. They would then experiment with them endlessly, creating bigger and bigger explosions, until they would inevitably blow up their parents' house! Eventually, those chemistry sets were deemed too dangerous and were banned from hobby stores and relegated to controlled labs and schools where supervision could be maintained.

Now we have elitist academics who think they are so smart that they should have unlimited power to experiment upon all of us, just like the out-of-control teenager in those former news stories of yesteryear. And these out-of-control central bankers are just as blind to their hubris, as those teenagers who destroyed their parents' homes decades ago.