Memo to Alan Greenspan: Keep Quiet

Nicknaming him 'The Undertaker,' Ayn Rand was once skeptical of Greenspan's capacity as a thinker and a human being.  Given recent events, Rand's initial assessment seems sadly prophetic.

I'm getting tired of Alan Greenspan. First, the former Federal Reserve chairman blamed an allegedly unregulated free market for the housing and financial debacle. Now he favors repealing the Bush-era tax cuts.
This has a certain sad irony. Recall that Greenspan once was an associate of Ayn Rand, the philosophical novelist who provided a moral defense of the free market, or as she put it, the separation of state and economy.

Greenspan even contributed three essays to Rand's book "Capitalism: The Unknown Ideal" — one for the gold standard, one against antitrust laws, and one against government consumer protection.
It was slightly bizarre when Greenspan accepted President Reagan's appointment to run the Fed — maybe he thought that as long as the Fed exists, better someone like him run it rather than one who really believes government should centrally plan money and banking.

Be that as it may, Greenspan went on to pursue an easy-money policy in the early 2000s that is widely credited, along with the government's easy-mortgage policy, for the boom and bust that followed.
During a congressional hearing two years ago, Greenspan shocked me by blaming the free market — not Fed and housing policies — for the financial collapse. As The New York Times gleefully reported, "(A) humbled Mr. Greenspan admitted that he had put too much faith in the self-correcting power of free markets."
He said he favored regulation of big banks, as if the banking industry weren't already a heavily regulated cartel run for the benefit of bankers. Bush-era deregulation is a myth perpetrated by those who would have government control the economy.
We libertarians were distressed by Greenspan's apparent abandonment of his free-market philosophy and his neglect of the government's decisive role in the crisis.
But at least he took a shot at the new controls Congress coveted: "Whatever regulatory changes are made, they will pale in comparison to the change already evident. ... (M)arkets for an indefinite future will be far more restrained than would any currently contemplated new regulatory regime."
But now Greenspan, going beyond what even President Obama favors, calls on Congress to let the 2001 and 2003 Bush tax cuts expire — not just for upper-income people but for everyone. "I'm in favor of tax cuts, but not with borrowed money. Our choices right now are not between good and better; they're between bad and worse. The problem we now face is the most extraordinary financial crisis that I have ever seen or read about," he told the Times.
He says he supported the 2001 cuts because of pending budget surpluses, but now that huge deficits loom, new revenues are needed.
Why? Brian Riedl of the Heritage Foundation says that since the cuts, "The rich are now shouldering even more of the income tax burden." The deficit has grown not because we are undertaxed but because government overspends. "Tax revenues are above the historical average, even after the tax cuts," Riedl writes.
Given the stagnant economy, this is the worst possible time for tax increases. (Is there ever a good time?) Taking money out of the economy will stifle investment and recovery, and it's unlikely to raise substantial revenue, even if that were a good thing.
Finally, the stupidest thing said about tax cuts is the often-repeated claim that "they ought to be paid for." How absurd! Tax cuts merely let people keep money they rightfully own. It's government programs, not tax cuts, that must be paid for. The tax-hungry politicians' demand that cuts be "paid for" implies the federal budget isn't $3 trillion, but $15 trillion — the whole GDP — with anything mercifully left in our pockets being some form of government spending. How monstrous!
If cutting taxes leaves less money for government programs, the answer is simple: Ax the programs!

John Stossel is host of "Stossel" on the Fox Business Network. He's the author of "Give Me a Break" and of "Myth, Lies, and Downright Stupidity." To find out more about John Stossel, visit his site at

16 comments from readers  

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Mr. Stossel, you are right. When Alan Greenspan accepted the Fed appointment, I thought, "This cannot be the Alan Greenspan who contributed to Capitalism, The Unknown Ideal." Unfortunately, I was wrong, and now he has become much worse. I think he lost his mind.
Why is it, we hear every day about the deficits, and how we need to pay up the deficit, and we NEVER hear about NOT SPENDING SO MUCH....??

Anyone in the private sector that spent like a congress critter would be in jail!
Excellent insights. I reckon an economic nose-dive is what the big 'trusts' seek. The bigger the crises the more frightened people become and the easier the push for bigger government intervention, more regulation to keep competition at bay, and greater taxation to keep the debt machine going just that little extra bit longer.
As usual, Stossel hits it right on the nose. Greenspan doesn't favor using "borrowed money" to pay for entitlement programs. He would rather employ stolen money. Isn't he generous? Soon we will all give 70% of our income to the man, in hopes of seeing 40% return to us in the form of some bloated 'social' program. If you read Greenspan's biography you will find that he was largely a failure at predicting markets prior to being pegged to run the Fed. He was just a gadfly in the DC social scene - a very charming weasel!. Somehow he has managed the masses into thinking he knows what he's talking about. He iis either disingenuous or a fool. Either way he is a fool. ARI and the entire objectivist should denounce Greenspan publicly, which is I guess what Stossel is doing. Bravo!
I agree with you John except for one point. A tax cut must have matching spending cuts. So when Greenspan stated "I'm in favor of tax cuts, but not with borrowed money." he is saying that taxes and spending should never be decoupled as they were with the Bush tax cut. Bush perpetrated a con that is similar if not the same as a Ponzi scheme. He provided relief for the current taxpayers at the expense of future taxpayers. This 'good for now, bad for the future' policy makes him no different than the Democrats.
"Bush Era" deregulation was a long term continuation of 're-regulation' -- the systematic replacement of 50 sets of state banking and lending regulations in parallel with a single over-bearing federal model, via court case after court case and even USSC case.

That single point of failure economic system design was a systemic mistake.

"It's the economies, stupid, not 'the' economy."

The phrase is 'United we stand.' Not 'United it stands.'

We don't build bridges that way(look at a suspension bridge cable), and we shouldn't be replacing economies and try to build 'a' economy that way, either.

Single point of failure is a lousy idea. OneSizeFitsAll doesn't. All our eggs in one basket is a lousy idea. Monopolists with guns are no less monopolists than monopolists without guns.

If 50 sets of state banking and lending regulations were still in place, there would be no 'Countrywide.' There might have been a 'StateWide', and a 'Bank of California', and there would not have been a spontaneous national alignment on a single social experiment. If one state had run amok with a flawed model, the other 49 would have easily absorbed their nonsense, and this crisis would never have made it past P8 of the local papers.

We need to transition back to 50 experiments running in parallel, not one all or nothing experiment running serially. We need to restore federalism, and back away from this new American Totalitarianism. It is a lousy way to build a complex system, like the economies.
With so much of the tax burden on the rich, any move they make to avoid taxes, such as expatriation, will have more of an effect than it would otherwise. Government is actually making an Atlas Shrugged scenario more realistically plausible by concentrating its financial dependence on fewer people with more money.
Thank you, thank you! Finally someone has publicly said what I've been yelling at my t.v. every time I hear a talking head - whether on CNN or FOX, babble about "paying" for tax cuts!

"Finally, the stupidest thing said about tax cuts is the often-repeated claim that "they ought to be paid for." How absurd! Tax cuts merely let people keep money they rightfully own. It's government programs, not tax cuts, that must be paid for."

Even so-called Republican members of Congress are chanting this mantra about paying for tax cuts. The ridiculous lengths our power and cash-hungry legislators and the leech-like programs and people who depend on them will go to bleed those of us who produce have reached new heights. What will happen when the leeches finally manage to kill the host?
I'm sitting here with a copy of Ayn Rand "Capitalism" The ultimate ideal with Greenspans essays included. I enjoyed the discussion on the anti-trust and how he relates the relationship of "crony capitalism" with govenment to supress competition and then everyone complains about it. This is the same guy that is testifying like this? Maybe he misses the limelight of the the money god? Figures the "boys" in Washington will pull him back into the limelight if he sticks to the party line? This country is built on the concept that the "king" doesn't own everything and in our case the government doesn't own 100% of national revenue although the tax code sure sounds that way as what we keep is a "credit". The comments on paying for the Bush era tax cuts echo this view. We're in for a run on our personal banks and the fix is in. What is the road to Galts Gulch these days? I named my boat that but it only holds 10!!!!!!
(profile not found)
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I can see why Greenspan's conversion makes you uncomfortable and why you want him to just shut up.

You see, whereas Rand lived her entire "pure capitalist" life in the ivory tower, Greenspan had to actually face the real world and wrestle with tough policy decisions. We can only speculate on how Rand's world view might have changed if she had to actually deal with reality.

Yes, government policy helped create the financial meltdown, but it was also created by greed in the private sector -- unleashed by deregulation of the financial sector (Dec. 1999). Private companies created loads of "financial innovations" to obscure risk and create huge profits. And yet you continue to advocate even less regulation of the financial markets? Get real.
Greenspan does look like and undertaker. It's sad he could not live up to ideals a lot of us had for him ... given his association with Ayn Rand. Now that an idealist is n the whiteshouse and democrats control the votes, the future of America looks bleak. One wonders if there is any hope left.
Jim H
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I have been hoping for years that Alan Greenspan was pulling a Francisco D'Anconia. I still think he might be doing just that. Perhaps, we will still see him say in the end, after the crash and the lights go out in New York City.... " asked for it, you got it brother..." We ALL would certainly have it coming.
Mr. Stossel is articulate in the quintessential sense that his points are made succinctly to a rational person while still offering clarity to the uninitiated.He helps you understand the gravity of our situation now. I would love to have a dialogue with such a well skilled thinker who has demonstrated such a high level of personal courage in the face tremendous pressure of the mainstream media. To those of you who know and truly love this man, I beseech you to be diligent in covering his back. John, we support you !!
Sorry, I rate this article a 20.
It sounds as though Greenspan has been "assimilated into the collective" of Papist-Khazakh-cabal socialism ruining America into the ground, but such is commonplace when pull-peddlers and looter-advocacies beckon one to worship the only actual trinity, lauded of fascist, greedy kleptocrats: Money, power and sex.

Individual liberty and autonomy made this nation the envy of the world! Now collectivism, excused by socialistic and spiritualistic altruism - from the BFIWs and their Pope to the Earth-bitch-worshiping "scientific" mystics - threatens to fulfill the apocalyptic vision at the end of Rand's Atlas Shrugged!

If we are to regain our freedom and return to being a nation worthy of the title of "superpower", spiritualist economic fallacies and follies - from environmentalism to Keynesian economics - MUST be rejected and cast off, lest we sink into the abyss of a New Dark Age.
Riiiiiiight... The very wealthy who in reality pay something like 15% of their taxable income in taxes should pay even less. Note that is TAXABLE income, not 15% of all their income. While the working poor pay at least 18, and more likely 20% of their income in taxes. But since the poor pay no INCOME TAXES, it is not really taxes, and they are just getting a free ride.

Lies like this will not sell freedom or smaller government

The largest fault of these pontificating blow-hards is that they think that none of their readers have IQ's in triple digits.
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