February 01, 2006

The Greenspan Standard


From the International Herald Tribune: As Greenspan leaves Fed, uncertainties loom for Bernanke.

Stepping down after 18 years as steward of the U.S. economy, Alan Greenspan left his successor a wide berth to set his own policy but also some major uncertainties about the future.

This is a cover illustration we recently created for The Intellectual Activist magazine. Here are some excerpts from the cover story by Robert Tracinski:

For two decades, Greenspan has reigned over the financial markets like the inscrutable god from some arcane Eastern religion, with his oracular pronouncements about "overheating" and "irrational exuberance" serving as portents to gauge the prospects for the next season's financial weather. ...

Under "the Greenspan standard," [in contrast to the gold standard Greenspan once advocated], what backs the value of money? What backs it is Alan Greenspan himself -- that is, the personal effort and abilities of a single man, whose talent at immersing himself in reams of economic statistics has been our primary safeguard against inflation for almost two decades. ...

A New York Times article summed up Greenspan's legacy with the headline, "The Doctrine Was Not to Have One." There is name for the doctrine of eschewing all doctrines: it is the philosophy of Pragmatism. This is the unofficial state religion in our nation's capital, and it is what seems to have replaced Ayn Rand's influence in Greenspan's later years. Ultimately, he accepted the premise that the economy must be managed by a governmental despot -- and set out simply to ensure that it was managed by a competent, benevolent despot.

Posted by Forkum at February 1, 2006 09:45 PM