Alan Greenspan is one of those people whom I find very intelligent, yet I have a lot of contempt for him. He could have done so much for the cause of liberty, but instead he chose to sell out.
For some reason, I find parallels with Colin Powell. This is a man who is supposedly very intelligent and honorable. To me, Powell is the opposite of honorable. He is a disgrace. He sat in front of the United Nations and lied about weapons of mass destruction in Iraq. He knowingly lied. Whether or not he was pressured to lie or was just part of the evil people plotting war, I don’t know. But he knew the information he was presenting was false. He could have resigned his position in protest, and he wouldn’t have starved from being unemployed.
Greenspan was part of Ayn Rand’s circle in the 1960s. He wrote one of the best essays ever on gold and its check against the state.
But Ayn Rand suspected that Greenspan was a social climber. She did not live long enough to see this come to full fruition.
I know some libertarians, when asked what they would do if nominated to the Federal Reserve, say they would instantly resign. But I don’t necessarily fault Greenspan for becoming Fed chair in and of itself.
The problem is that Greenspan used his long tenure as Fed chair to defend the establishment and continue the process of monetary inflation, bailouts, and loan guarantees.
Greenspan, even if he had sort of gone along with the system, still could have used his position for educational means. At least Ronald Reagan was somewhat educational in defending liberty in his speeches, even if his policies did not always reflect that.
Greenspan’s policies were a disaster, and his rhetoric was a disaster. Most people didn’t understand what he was saying half the time anyway. If he had used his position as a platform to advocate a return to a gold standard, perhaps we could go a little easier on him.
Instead, when he was in office, he actually told Ron Paul that the Fed could essentially mimic what a gold standard would do.
In a recent interview, Greenspan referred to this moment, stating: “When I was Chair of the Federal Reserve I used to testify before US Congressman Ron Paul, who was a very strong advocate of gold. We had some interesting discussions. I told him that US monetary policy tried to follow signals that a gold standard would have created. That is sound monetary policy even with a fiat currency. In that regard, I told him that even if we had gone back to the gold standard, policy would not have changed all that much.”
Yet, in that same interview, Greenspan said: “But if the gold standard were in place today we would not have reached the situation in which we now find ourselves.”
This is a typical politician. It is like Vicente Fox all of a sudden showing some opposition to the war on drugs after his time in office as president of Mexico. Now it doesn’t matter much.
When politicians do things such as advocate higher minimum wages or advocate more spending to stimulate the economy, we can’t always be sure if they are just economically ignorant or if they are knowingly promoting bad policies just to advance their own power.
In the case of Greenspan, I think it is clear. Greenspan is not economically ignorant. The policies he promoted as Fed chair were evil. He was knowingly promoting policies that were harmful to the U.S. economy and the average guy on the street. He was knowingly helping the bankers and the politicians to spend more.
This is why principles and ethics are so important. I would rather elect a politician who is honest while economically ignorant, than someone who understands economics but is unethical. Of course, the right combination is to have someone who is ethical and principled, and who understands economics. But Ron Paul only comes around once in a generation, at most.