Alan Greenspan: Republican Attacks On Ben Bernanke 'Wholly Inappropriate And Destructive'

Former Federal Reserve chairman Alan Greenspan says enough with all the attacking of Ben Bernanke.

"Anyone has the right to criticize Federal Reserve policy, but it is wholly inappropriate and destructive to engage in ad hominem attacks," Greenspan told The Financial Times, referring to GOP presidential candidates' bashing of his successor, Ben Bernanke.

Bernanke has led the Fed since 2006, during the financial crisis, recession and recovery. His drastic actions to stimulate the economy -- keeping interest rates near zero and tripling the size of the Fed's balance sheet -- have become a flashpoint in the Republican presidential primary. On top of all that, add to this the irony that Greenspan and Bernanke actually are Republicans.

Ron Paul, a Republican Congressman and presidential candidate, has long called for an end to the Federal Reserve and a return to the gold standard. Once seen as largely outside the mainstream, Paul's views on the Fed have been gaining traction in the Republican discourse.

When he was still in the race, Texas Governor Rick Perry derided Bernanke saying in August that if the Fed chairman "prints more money between now and the election, I don't know what y'all would do to him in Iowa, but we would treat him pretty ugly down in Texas." He added that printing more money before the election would be "almost treasonous."

Republican frontrunner Mitt Romney has said that if he gets elected he wouldn't let Bernanke stay on as Fed chairman. "I wouldn't keep Bernanke in office. I would choose someone of my own," Romney said in October.

Newt Gingrich expressed similar sentiments: "If they want to really change things, the first person to fire is Bernanke, who is a disastrous chairman of the Federal Reserve," Gingrich said in October.

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Source: Huff
Author: Bonnie Kavoussi

After Alan Greenspan, Ben Bernanke Ends Cult Of Personality At Fed Through Transparency

WASHINGTON, Jan 27 (Reuters) - Ben Bernanke has achieved at the Federal Reserve what John Maynard Keynes only dreamed of - that economists be viewed not as cult heroes but as humble, competent people on a level with dentists.

Alan Greenspan, Bernanke's predecessor as Fed chairman, was proclaimed a "Maestro" in a 2000 biography as he presided over the longest-ever U.S. economic expansion, working mostly behind a veil of secrecy and boasting of mumbling incoherently.

In the 1980s, then-Chairman Paul Volcker chomped on a huge cigar, glowered and blinded the public with a blizzard of data on monetary aggregates to wrestle down inflation.

Both were larger-than-life personalities.

Bernanke in contrast cuts a modest figure, and has taken much of the mystique from U.S. central banking by making the Fed a more open institution - a move he forwarded this week by unveiling a new monetary policy framework with an explicit inflation target of 2 percent.

In the process, he is quietly revolutionizing the Fed and leaving a lasting legacy for the framing of U.S. monetary policy.

Alan Greenspan: Don't Blame Capitalism For All This Income Inequality

Say what you will about income inequality to ex-Federal Reserve Chairman Alan Greenspan, just don't blame the free market.

In an op-ed for the Financial Times Thursday, Greenspan wrote that the "legitimate concern of increasing inequality of incomes reflects globalisation and innovation, not capitalism."

The Occupy movement, presidential campaign and slow economic recovery have brought renewed attention to the growing gap between the rich and the poor. In the U.S., the top one percent of earners have seen their incomes skyrocket in recent decades while those of everyone else sputtered, potentially threatening economies worldwide.

The root cause for the growing gulf remains a subject of much debate.

Yet a major driver of that division, most obviously, is that the richest global citizens have become much, much wealthier. An indication of exactly how wide the gulf has gotten: That six Walmart heirs were worth the same amount as the bottom 30 percent of Americans in 2007.

But while Greenspan pins the blame on the process of globalization itself, a 2003 study from the United Nations University found globalization to only account for 7 to 11 percent of the variation in income inequality among countries worldwide. In addition, it seems that increased globalization in the form of a trade boost did little to push America's rich and the poor further apart during the 1990s, according to a 2010 report by Slate's Timothy Noah.

A Heaping Helping of Ridicule for the Fed

Newly released transcripts expose the utter incompetence of those responsible for the preventable disaster that was the 2008 financial crisis.



In keeping with its policy of releasing transcripts with a five-year lag, the Federal Reserve Board just released the transcripts from its 2006 Open Market Committee (FOMC) meetings. There is much there to cause pain and amusement.



In the latter category, there is probably nothing that can beat Treasury Secretary Timothy Geithner (then the president of the New York Federal Reserve Bank) telling outgoing Fed Chairman Alan Greenspan:

I’d like the record to show that I think you’re pretty terrific, too. And thinking in terms of probabilities, I think the risk that we decide in the future that you’re even better than we think is higher than the alternative.

But there is more than obsequiousness on display here. There is also profound ignorance of the economy among the nation’s top economic policymakers.



Keep in mind 2006 is the year that the $8-trillion housing bubble hit its peak and began to deflate. In other words, this covers the period in which the Titanic hit the iceberg and began to take on water. But no one on this sinking ship is even thinking about the lifeboats.



There is no one in the eight FOMC meetings who suggests that the economy faces any serious turbulence ahead. There is not even discussion that a mild recession could be in sight.

Flawed Titan of the Fed

In the fall of 2008, with the global economy in shambles and panic spreading throughout the financial system, a seemingly humbled Alan Greenspan—the former chairman of the U.S. Federal Reserve—appeared before Congress and admitted the unimaginable: there was a “flaw” in his world view that had prevented him from foreseeing the worst credit crisis in American history.

And so begins The Flaw, David Sington’s new documentary about the origins of the financial crisis. The movie, which opened in London last week, makes a compelling argument that the nature of American capitalism has changed in recent decades, giving rise to unstable levels of inequality and a mistaken belief in the self-correcting power of free markets. The Flaw focuses largely on the housing market and offers a far less blistering critique of Wall Street than Inside Job¸ Charles Ferguson’s 2010 Oscar-winning documentary. Yet in both films, Greenspan, who spoke with NEWSWEEK at his office in Washington, D.C., is cast in a similar role—as someone who personifies much of what went wrong with the economy.

Since the housing bubble burst, and Wall Street teetered on the brink of collapse, Greenspan—once widely hailed as the oracle of the American economy—has seen his standing plummet. Most recently, Paul Krugman, the Nobel Prize–winning economist and columnist for The New York Times, wrote that Greenspan is continuing “to cement his reputation as the worst ex–Fed chairman in history”—a searing statement even for someone on the left.

And yet what continues to drive much of the criticism of Greenspan is not so much his record at the Fed but his recent political commentary. Despite his 2008 mea culpa, Greenspan has largely remained steadfast in his faith in laissez faire, arguing against the government’s stimulus package and recent financial regulation. As Congress continues to fight over long-term spending and the future of entitlements, it is precisely this sort of stubborn libertarianism that has enraged Greenspan’s critics and once again cast a spotlight on his legacy.

When Greenspan retired five years ago, his reputation seemed unimpeachable. Despite fears that he would govern the central bank as a conservative ideologue—he was once a disciple of the radical libertarian writer Ayn Rand—during the early ’90s, Greenspan proved to be a pragmatist and a highly successful technocrat, according to Brad DeLong, an economist at the University of California, Berkeley. One of the central bank’s two primary jobs is to keep prices stable and employment high. On both fronts, Greenspan’s record, from 1987 to 2000, was strong, according to friends, former colleagues, and even critics. “The years that Alan Greenspan was chair were years of unprecedented growth and price stability,” says Larry Summers, the former Treasury secretary.

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Source: Newsweek