U.S. Intellectual History Blog

The Mind Of A Federal Reserve Chairperson

This New York Times piece will likely serve as a nice source for future historians looking to construct an intellectual history of the Federal Reserve chair’s office. The author, Peter S. Goodman, links Alan Greenspan’s libertarian, free-market philosophy to both Ayn Rand and a somewhat simplistic faith in investors to be cautious. The article makes a strong attempt to chronologically follow the signs that an under-regulated derivatives market might turn out for the worse. Many legislators and contemporaries are quoted. It is clear that many intelligent people didn’t understand how derivatives work.

During a crisis it’s easy, of course, for colleagues and former regulators (both Democratic and Republican) to come out of the woodwork with 20/20 hindsight. Others act like they were fooled by Greenspan’s expertise and confidence. Warren Buffet comes out smelling like a rose. Still, no one wants to be wrong.

The article is compelling. Check it out. – TL

2 Thoughts on this Post

  1. There is a new Robert Heinlein book just out (it was his first from 1930 and never printed while he was alive) that is perhaps his best treatise on government, life, economics etc in a cool “I am from 1930 and have be reborn in 2086 (and living in a house with a beautiful naked woman) format”.

    His two pages on how the future finally got rid of the Federal Reserve Private bankers I found so shockingly prescient I had to pinch myself.
    His speculation of what happened to the world after 1930 is also amazing.
    It has just been printed for the first time.

    Absolutely amazing stuff. As with all his stuff he has a cool story and he discusses within the story huge ideas about a better system of living for man and governments. His examination of economic theory being taught as you are the old timer learning the new advanced ways would have probably won him a noble prize in economics if they had been written for a scholarly journal.

    It was too risque to be published in the 30’s when he wrote it. (too much talk about his naked woman host and the lack of need for marriage I suppose)
    For Us, The Living: A Comedy of Customs


  2. How does one implement Libertarian ideas while at the head of a central bank? His contributions to Ayn Rand’s collection of essays on Capitalism represent ideas he has not advocated nor practised in decades (the gold standard for instance). While his affiliations with those strains of thought are interesting, to make out like he governed the Fed with those ideas is ridiculous. Greenspan was a classic monetary manipulator, and as such, hardly an implementor of libertarian ideas or those of Ayn Rand, who advocated the abolition of the Fed. The financial markets in the United States have not been marked by “capitalism” at least since the depression and to act like the current turmoil is the result of any sort of “free market” is duplicitous. Our economy, like most economies in the world, is a mixed economy of free and command components. We should be blaming that, as opposed to something which does not exist. Of course, opponents of capitalism have a strong interest to tar it by blaming the current situation on it, but that doesn’t make it so.

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