Feb. 14, 2009
Keep an eye out for an amazing documentary on CNBC called "House of Cards." (It will be showing numerous times this weekend.) David Faber narrates a two-hour program on the current financial-economic recession and its origins in mortgages, securitized debt instruments, the dishonest or incompetent rating of those instruments, and governmental incompetence. Greed, fraud, stupidity, and recklessness are all on display. It is an excellent program that is a nice introduction to what happened to our economy.
To me one person stood out above all the rest: "The Maestro," Alan Greenspan, former U.S. Federal Reserve Chairman. Watching Greenspan make excuses for his non-stop money printing in the early 2000s makes it clear that this guy had no business being in that job. He essentially admits that he made no effort to control the Fed's credit expansion because it wasn't what the political powers in Washington wanted. This is the problem with having a politician, like Greenspan, as Fed Chief. The Fed was designed to be insulated from political decision-making; his job was to make the tough choices and control credit. Instead, he threw up his hands and cranked up the presses. Disgraceful.
Economists from the Austrian School knew Greenspan's policies were dangerous. Read this before-the-crash assessment of his Fed tenure by Stefan Karlsson from the Ludwig von Mises Institute website. Greenspan's philosophy was not deregulatory. No group of economists is more deregulatory than the Austrian School, but they are also committed to price stability and tight money. Don't be fooled if someone tells you Greenspan was a conservative; he wasn't.