Sunday, November 10, 2013

Short Review: Alan Greenspan's The Map and The Territory

Aside from a few interesting factual observations, one gets the sense in reading Alan Greenspan's The Map and The Territory that Greenspan is like a blind man walking down the street without a cane.

For most of the book, Greenspan discusses recent financial crises without a seeming business cycle theory. The best he can come up with is a discussion of Keynesian "animal spirits,' but there is no discussion of Fed money printing and the manner in which  that printing distorts the investment structure.

In this sense the book is a waste, aside from these observations made by Greenspan in the book:
Particularly surprising has bee the fact that it was not the political descendants of FDR but "fiscally prudent" Republican administrations who led the [social spending] charge. Since 1969, during Republican administrations, social benefit spending rose by 10.4 percent annually. (Reagan's mark was 7.3 percent)
Bottom line: Republican's are as bad, if not worse than Democrats, when it comes to spending on new benefits.

And as for the end of the dollar as a reserve currency, Greenspan understands the ramifications.
There is a limit to a reserve currency' s accumulation of foreign borrowings. Should the United States ever reach that limit and sources of new funding dry up, social benefit spending will either be wrenched lower or, more likely, funded by printed money. Our status as the world's leading financial power will be profoundly shaken.

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