Greenspan, a conservative Keynesian, follows a policy of monetarism which is a tendency in economic thought that emphasizes the role of governments in controlling the amount of money in circulation .[Encyclopedia Brittanica online]
Many blame Greenspan for the crisis that took down George Bush. When Greenspan raised interest rates in the early 2000’s, many blamed that action for the bursting of the dot.com bubble. Forbes saw the rise of gold as an advantage over Greenspan’s loose monetary policy. Followers of the Austrian School blame Greenspan’s policies for creating excessive liquidity, causing lending standards to deteriorate, and resulting in the housing bubble of 2004-2006.
May 1 (Bloomberg) — In the taped interview below, former Federal Reserve Chairman Alan Greenspan talks about the outlook for U.S. stocks, bonds and Federal Reserve Monetary Policy. Greenspan, speaking with Tom Keene at the Bloomberg Link Washington Summit, also talks about the U.S. housing market and federal budget reduction. (Source: Bloomberg)
It is hard to follow because he never seems to give a real clearcut response. He says a whole lot of nothing at great length.
At the end of this video, about 42 minutes in, however, he says something crucial. Greenspan tells the truth when asked about putting the Federal Reserve back on the gold standard because deficit spending is the insidious road to the welfare state.**** Gold stands in the way of this process towards the welfare state and it especially stands in the way of stealing property rights.
Greenspan’s response is…Look, the American people have chosen to have a five money standard because they want a welfare state. You cannot have a gold standard and a welfare state at the same time and we have made a decision as a society that we will be dealing with the welfare state.
He follows up by saying that gold is a currency and is the only one that doesn’t require somebody’s credit. He doesn’t understand what it is about this particular metal but it’s always been going back to antiquity.
***A welfare state is a “concept of government in which the state plays a key role in the protection and promotion of the economic and social well-being of its citizens. It is based on the principles of equality of opportunity, equitable distribution of wealth, and public responsibility for those unable to avail themselves of the minimal provisions for a good life. In other words social justice and entitlements. [Encyclopedia Britannica online]