Let's Bury Greenspan, Not Praise Him

By: Peter Schiff | Fri, Feb 3, 2006
Print Email

This week, Alan Greenspan bids a long overdue farewell to the Federal Reserve that he chaired for eighteen years. Praise from his Washington and Wall Street beneficiaries has naturally arrived by the boatload. His monetary policies enabled reckless and seemingly consequence-free deficit spending, helping incumbent politicians repeatedly win re-election; and his expansion of money supply and credit facilitated non-productive financial transactions, all to the benefit of the bankers who arranged them. It should be surprising to no one that he is so popular among these groups. The fact that Greenspan is so highly regarded by politicians and investment bankers is not a sign of how well he did his job however, but of how poorly.

Helping to win elections and fund bonuses comes with consequences, in this case an unbalanced U.S. economy teetering on the brink of economic disaster. During Greenspan's tenure America was transformed from the world's largest creditor to its greatest debtor, from the world's mightiest industrial power to a second rate service provider, and from a nation of responsible savers to one of reckless spenders. Self-sacrifice has been replaced by self indulgence, hard work by paper pushing, and genuine productivity by accounting gimmickry.

In effect, Greenspan helped Americans squander the "mother of all" inheritances. As any philandering playboy can attest, the process is easy and extremely enjoyable. However, it's not something worth bragging about. By focusing on consumption and asset prices, while ignoring debt, production and legitimate wealth creation, the Greenspan era was confused with one of genuine prosperity. To quote the great Ludwig Von Mises, "It may sometimes be expedient for a man to heat the stove with his furniture. But he should not delude himself by believing that he has discovered a wonderful new method of heating his premises."

As evidence of his mastery, Greenspan boosters point to what they call the "longest economic expansion in U.S. history," and to his seeming dexterity in dealing with financial crises. In fact, the only thing Greenspan succeeded in doing was delaying the inevitable. By blowing more air into every bubble he encountered, Greenspan succeeded largely by giving himself enough time to get out of Dodge before things got dicey. His long overdue departure would be an event worth celebrating, were it not for the fact that he is being succeeded by someone who may well be even more incompetent.

While the Greenspan Fed was certainly good for bankers and politicians, it was a disaster for the rest of America. In his wake, the long term solvency of America's economy, its financial institutions, and most importantly, the integrity of its currency, all teeter on the brink. Rather than being a maestro, think of Greenspan as the Pied Piper, who led Americans down a path to financial ruin. We all had a blast as the deceptively pleasing tune reverberated in our heads, but reality will set in when the music finally stops.

Do not wait for the music to stop playing. P rotect your wealth and preserve your purchasing power before it's too late. Start by downloading my free research report on the coming collapse of the U.S. dollar at www.researchreportone.com and subscribing to my free, on-line investment newsletter at http://www.europac.net/newsletter/newsletter.asp.


Peter Schiff

Author: Peter Schiff

Peter Schiff C.E.O. and Chief Global Strategist
Euro Pacific Capital, Inc.

Peter Schiff

Mr. Schiff is one of the few non-biased investment advisors (not committed solely to the short side of the market) to have correctly called the current bear market before it began and to have positioned his clients accordingly. As a result of his accurate forecasts on the U.S. stock market, commodities, gold and the dollar, he is becoming increasingly more renowned. He has been quoted in many of the nations leading newspapers, including The Wall Street Journal, Barron's, Investor's Business Daily, The Financial Times, The New York Times, The Los Angeles Times, The Washington Post, The Chicago Tribune, The Dallas Morning News, The Miami Herald, The San Francisco Chronicle, The Atlanta Journal-Constitution, The Arizona Republic, The Philadelphia Inquirer, and the Christian Science Monitor, and has appeared on CNBC, CNNfn., and Bloomberg. In addition, his views are frequently quoted locally in the Orange County Register.

Mr. Schiff began his investment career as a financial consultant with Shearson Lehman Brothers, after having earned a degree in finance and accounting from U.C. Berkley in 1987. A financial professional for seventeen years he joined Euro Pacific in 1996 and has served as its President since January 2000. An expert on money, economic theory, and international investing, he is a highly recommended broker by many of the nation's financial newsletters and advisory services.

Copyright © 2005-2016 Euro Pacific Capital, Inc.

All Images, XHTML Renderings, and Source Code Copyright © Safehaven.com