Alan Greenspan just can’t stay away from the spotlight these days.
The 90-year-old, former Fed chairman, who in recent years has sounded surprisingly similar to Trump (or perhaps it’s the other way around), most notably in late June when he warned that “A Crisis Is Imminent” and urged a return to the gold standard – similar to what Trump has warned only to get bashed as a delusional, Putin-loving, conspiracy theorist – made more provocative statements today when during a conference in Washington on Tuesday evening, he said that the U.S. economic and political system could be undermined by what he called “crazies.”
Perhaps he was referring to central bankers? Alas no, instead he peddled some fiction, guaranteeing that he won’t get any holiday cards from the Obama administration:
“It is the worst economic and political environment that I’ve ever been remotely related to.”
That said, his concerns which were similar to ones he has voiced before, were valid. He said that on the economic front, the U.S. is headed toward stagflation, adding that “politically, I haven’t a clue how this comes out.”
“We’re not in a stable equilibrium,” he said. “I hope we can all find a way out because this is too great a country to be undermined, by how should I say it, crazies.”
So who was he referring to? It was unclear: Greenspan, who served from 1974-1977 in the Republican presidential administration of the late Gerald Ford, declined to comment on Wednesday when asked whom he was referring to. We are confident every readers can come up with their own answer.
In his comments on Tuesday, Greenspan traced the rise of populism in the U.S. all the way back to 1896, when William Jennings Bryan gave his “Cross of Gold” speech at the Democratic Party national convention opposing the gold standard. We find it ironic that even a converted central banker such as Greenspan is willing to admit that record wealth inequality and populist anger are the result of the collapse of the gold standard, especially since it was this website which first proposed precisely that in an article titled “Why the 1% hates the gold standard”, that it was Nixon’s end of the gold standard in August 1971 that launched the unprecedented income growth for the 1% at the expense of 90% of the population.
While we were not present, we are confident Greenspan also failed to observe just how instrumental the institution he formerly headed for nearly three decades has been in bringing the US to the tipping point between populism and civil war.
Greenspan repeated his concern on Tuesday that increased government spending on social security and healthcare are crowding out private investment and leading to slower economic growth. He bemoaned the fact that neither presidential candidate was talking about reining in those expenditures.
“Nobody wants to discuss it” for fear of a political backlash, he said.
But why discuss it when any – and every – politician knows that they can just tell the Fed chair du jour to “get to work” and print some more money, leaving the truly important and politically unpleasant decisions for the next administration.