Submitted by Simon Black of Sovereign Man
Behold The Face Of Central Banker Hubris
March 18, 1996. It was the height of the dot-com boom years. And gracing the cover of Fortune magazine was a photo of a rather smug looking Alan Greenspan, then Chairman of the US Federal Reserve.
The headline across the top-- "It's HIS economy, stupid". The inside story was entitled "In Greenspan We Trust".
And the article went on to suggest that, no matter WHO won the presidential election that year between Bill Clinton and Bob Dole, Greenspan would still be running the economy. And handily.
This is a major testament to the state of our financial system. We award a tiny banking elite nearly totalitarian control over our money supply... and by extension, the economy.
We're just supposed to trust that they're good guys. Competent guys. That they know what they're doing.
Fast forward almost two decades. Long Term Capital Management. The NASDAQ bubble. The real estate bubble. The credit crunch. The mortgage crisis. The banking crisis. The sovereign debt crisis.
Now, this seemingly interminable series of emergencies is by no means the consequence of a single individual. But it's clear that Greenspan (and his successor Ben Bernanke) have had, by the very definition of their position, tremendous influence in getting us to this point.
Yet Greenspan's new book, The Map and the Territory, explains why he never saw any of this coming.
(You can read some of this for yourself if you're so inclined-- Foreign Affairs magazine just published an adapted excerpt from the book.)
Greenspan's explanation is as infuriating as it is arrogant.
He stops far short of accepting any responsibility, and merely states that the "conventional method of predicting macroeconomic developments. . . had failed when it was needed most, much to the chagrin of economists."
And of course, he melts his culpability away into the great masses of other economists, brashly stating that "virtually every economist and policymaker" completely missed the warning signs.
Yet as irritating as Greenspan's confession may be, there is no surer condemnation of this faux-science of economics than a former maestro himself pillorying its deficiencies.
Let's put it more bluntly. The guy who used to be in charge of the US economy openly admits that the 'science' they rely on to make decisions is fundamentally flawed.
The only thing these central bankers know how to do is print more money. Yet, as Greenspan tells us, they're completely ill-equipped to be making these decisions. Nor do they realize how severe the consequences will be.
John Maynard Keynes, the godfather of their economic models himself, once wrote:
"The process [of debasing the currency] engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose."
Not one man in a million. Based on Greenspan's own admission, this includes central bankers as well.
If all the objective evidence, and even their own assessment, points to the inevitable conclusion that this system is broken, isn't it time to consider taking independent steps outside of this system to protect what you've worked for your entire life?