Thursday, July 26, 2012

Greenspan on How the Coming U.S. Debt Crisis Can Be Resolved

This is an oldie but goodie. This is a clip from an August 2011 appearance by Alan Greenspan on Meet the Press.Greenspan actually tells it like it is: The Fed can print money any time it wants to meet debt payments. Greenspan discusses this as though it is actually a sane policy option.

Watch the reaction from former chairman of President Obama's Council of Economic Advisers, Austan Golsbee, as Greenspan spills the beans on the government's ability to just print money to pay off its debt.

9 comments:

  1. Haha! That reaction is priceless.

    Notice the Undertake doesn't even flinch when saying it.

    He'll be in his grave before he sees the full fruition of his policies, what a true Keynesian he is.

    I wonder how sociopathic one has to be to promote the policies he did despite at one time being for the gold standard.

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    1. Ron Paul said Greenspan still stood by his essay on Gold. So I guess Greenspan is for it in principle, but not in practice. Which reminds me of this sketch from Yes Minister: http://www.youtube.com/watch?v=OhZRDoGZg00

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  2. I thought printing their way out of debt WAS default.

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    1. You are correct. It's a form of default, cleverly designed not to appear as a default.

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  3. Full transcript is here:
    http://www.msnbc.msn.com/id/44050464/ns/meet_the_press-transcripts/t/meet-press-transcript-august/

    I see an analogy between Greenspan and Shatner, are they the joke or in on the joke? There's a good argument that can be made that Greenspan was simply captured by the system, scruples be damned. That makes him a joke.

    I wonder though... given the political constraints of being Fed chairman, maybe the smart choice was to go petal-to-the-metal with interest rates and as a way to hasten the inevitable demise of a morally flawed system of price controls.

    Ok - not too likely a conscious decision by a Fed chair, but if the unintended effect is to show how broken central banking and fractional reserve banking is, then all the better.

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  4. Greenspan, Bernanke, Draghi and so many more need a huge injection of common sense. He is indeed a big joke and should be prosecuted for it.

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  5. We can always pay debts by making the world poorer and less free. Durp, Durp!

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  6. Haha gold, lets all print money to pay off our debts? Oh hang on that would be fraud!! Unbelievable

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  7. There is one element missing in the explanation of the National Debt

    : The treasury prints two species at congress' request: 1) Treasury Bonds 2) Federal Reserve Notes. The Treasury Bonds go to congress and the Federal Reserve Notes go to the Federal Reserve. Congress and the Federal Reserve exchange their species so that the Federal Reserve ends up with the Treasury bonds and congress ends up with the Federal Reserve notes, which they promptly deposit in a bank. The Federal Reserve sells the Treasury Bonds in the open market. Certain Commercial Banks loan money to themselves for investment purposes, i.e. they create money out of thin air using the idea that they have deposits, and then buy the treasury bonds. The banks collect interest on the treasury bonds. While the money used to invest on the treasury bonds are said to come from depositors, the depositors come and withdraw the money. Where did the money come from to invest in the Treasury Bonds, then? The answer is that it came from thin air ... ex nihilo! So in this whole paper shuffle the only thing real are the people's labor that was used, and it is now represented in the Federal Reserve Note. But since the money the banks created was out of thin air, the banks circumvent the labor part of the definition of money. How long do you think it will take for the banks to own and control everything with that kind of scheme? We are seeing it now!



    The money deposited by congress in banks are then loan to the public, and to businesses. But what if congress want to use the money, which is, after all, the reason why they had the treasury print it in the first place? Well no problem, the money could be in two places at once, loan to the public and back in congress;s hand to promote programs, etc. Lets say the public buys houses with that money they borrowed...the person that got the loan buys a house and pays the seller with a paycheck. The seller, after selling his house deposits the money back in the bank and once he does that it becomes the basis for yet another loan to someone else. So the money supply grows exponentially and contracts just as quick. The Federal Reserve, meanwhile, puts certain policies to assure that the big banks do not go bankrupt, that do not fail. Meanwhile the smaller banks that are force to loan money fail, but only in books.

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