Backlighting

Greenspan Grapples for Stimulus With Ayn Rand

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That’s the underlying conclusion of an academic paper by former Federal Reserve Chairman Alan Greenspan. The article, which will appear this month in International Finance, a journal edited by my Council on Foreign Relations colleague Benn Steil, reviews a technical datum called corporate long-term fixed-asset investment.

Greenspan posits that failure by companies to choose to raise levels of such investment since 2008 is evidence of their concern about an unpredictable and overly activist federal government. U.S. policy makers are still using suspect models to plan and forecast, he says.

Then Greenspan casts doubt on whether those models are of any use, given past performance: “How can the internal structure of models that have such poor forecasting records be informative on the size and sign of coefficients and impact multipliers?”

In policy land, the fact that he would be even this bold is news. Greenspan is famous for equivocating. Still, this technical paper may not be the right medium for his message. Especially for those of us who think the verb “hamper” doesn’t quite capture the way government rolls and flattens the economy.

Fortunately Greenspan’s message will soon be delivered in a more accessible medium, and another Greenspan-related production, to boot. That medium is “Atlas Shrugged: Part I,” a movie set for release in the U.S. April 15. The film adapts “Atlas Shrugged,” a steamy libertarian novel featuring the ultimate corporate long-term illiquid investment, railroads.

Greenspan With Rand

As Greenspan notes in his autobiography, the author of “Atlas Shrugged,” philosopher Ayn Rand, influenced him heavily when he was a young economist. Greenspan did serious time in the author’s inner circle when she was working on “Atlas Shrugged,” an epic about how government takes down capitalism. According to Rand’s archivist, the future Fed chief sat in on the sessions when she read aloud her drafts.

In the story, an innovative steel executive, Henry Rearden, develops an alloy for track that will lay the path for a struggling railroad, Taggart Transcontinental, to speed ahead. But cogs within government and Taggart neither see the value in the new metal nor want to. Even James Taggart, the foolish head of the railroad, doesn’t appreciate what investment can do for the company. Only his brilliant, underappreciated sister Dagny sees the potential.

So far only the trailer of the movie is available to the public. It’s been viewed more than three quarters of a million times on YouTube alone. Between this available footage and the book, everyone can get a clearer understanding of what Greenspan is getting at in his paper. Putting the document side by side with excerpts from “Atlas Shrugged” is revealing.

Greenspan: “The defining characteristic of the tepid recovery in the United States that followed the post-Lehman freefall is the degree of risk aversion to investment in illiquid fixed capital unmatched, in peacetime, since 1940.”

Executive to boss in “Atlas Shrugged”: “Jim, there isn’t going to be any new track.”

Greenspan: “Most stimulus programs seek those appropriations and tax cuts most likely to be quickly spent. But if they were all completely spent, presumably the ideal, then of necessity saving would be zero. Yet in that case no production would have been diverted to foster innovations that increase output per hour and standards of living.”

Dagny Taggart: “If the road could afford it, I would scrap every piece of rail over the whole system and replace it with Rearden Metal. All of it needs replacing. None of it will last much longer. But we can’t afford it.”

Greenspan: “Henceforth, it will be exceedingly difficult to contain the range of possible activism. Promises of future government restraint will not be believed by markets. This must significantly further raise negative tail risk.”

“Atlas Shrugged”: Train wreck.

Greenspan: “The ‘wealth effect’ could effectively substitute private ‘stimulus’ for public.”

“Atlas Shrugged”: Sex scene in tunnel, delivered via verb-free expressionistic clauses: “Then, the sparkle of her diamond clip against the trembling copper of his hair.”

Devoted Randians and those disappointed by the monetary policy of Greenspan and his successor, Ben Bernanke, point out yet another “Atlas Shrugged” scene: the famous money speech of Francisco d’Anconia: “Whenever destroyers appear among men, they start by destroying money, for money is men’s protection and the base of moral existence. Destroyers seize gold and leave to its owners a counterfeit pile of paper.”

The larger relevance, however, is that a former Fed chairman and other thinkers are now highlighting the cost of government activism in new ways.

Gillian Tett, the editor of the U.S. edition of the Financial Times, calls our era the “Ad Hoc Age.” Stanford University economist John Taylor says our troubles began with a “Great Deviation” from monetary policy, which he dates to the period when Greenspan ran the Fed. Robert Higgs, a scholar at the Independent Institute, calls the problem “Regime Uncertainty” and has been writing about it for decades.

What has been missing is a popular vehicle to barrel through and make explicit what many Americans -- right, left or center -- already know intuitively or mathematically. All of which makes you wonder whether the release date for “Atlas Shrugged” will come soon enough.

Amity Shlaes, a senior fellow in economic history at the Council on Foreign Relations and author of “The Forgotten Man: A New History of the Great Depression,” is a Bloomberg News columnist. The opinions expressed are her own.)

http://www.bloomberg.com/news/2011-03-08/greenspan-grapples-for-stimulus-with-ayn-rand-commentary-by-amity-shlaes.html

To contact the writer of this column: Amity Shlaes at amityshlaes@hotmail.com

To contact the editor responsible for this column: James Greiff at jgreiff@bloomberg.net.

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Thanks, that was cute. I found this article on the sidebar of that page more interesting. It is about how hackers from China have been draining US corporations of data since 2009. In one case, Johnson & Johnson, the infection was carried back to headquarters by executives who had traveled to China with their laptops. In other cases, "spearfishing" of the executives of other companies opened the breaches.

(Spearfishing is a directed kind of phishing attack. Instead of a general message such as a Nigerian scam, the malicious email looks as if it came from a trusted source. Among those might be internal to the company, or apparently from a known business partner, or looking like a reply.)

You have to wonder how Atlas Shrugged ties into this...

Perhaps we are so drained of resources by our own predatory government that we do not have the wherewithal to resist outside attacks. Rome, weakened from within, would be a model.

Perhaps our collectivist-altruist-mysticist culture has elevated so many James Taggarts to so many key positions in so many corporations that, with their heads in the sand, they deny the problems, rather than fix them. (I mean, "Let's take our laptops to China." What kind of thinking is that?)

I am sure that other perhapses exist.

On the other hand, there is "East Minus West Equals Zero." We could hand it to them on a silver platter, but if their collectivism is worse than ours, it will do them even less good. All the Liberty Ships on the Murmansk Run couldn't keep the USSR afloat past 1989. Even crypto-nazis like Henry Ford and Thomas Watson could not save Germany from the Leader they embraced. ... at least, that's one view... Or is that like saying, "Who cares if the Visigoths take Dacia?"

Or is it deeper? Is it China's mistake - and ours - to think that Fortune 500 companies have things worth stealing, when the real engines of creation are not even perceived by the monument builders?

Edited by Michael E. Marotta

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Right now, The John Batchelor Radio Show is discussing the Quisling, Alan Greenspan's article and then by reference, they are discussing Ayn Rand and just mentioned that the movie which emphasizes the strike is opening next month.

They are making a reference to the withholding of cash by cur present corporation as a "capital strike" a la Ayn Rand's Strike in Atlas Shrugged.

Fascinating.

Amity Schales and Alan Kudlow are in the discussion with Batchelor.

Adam

Edited by Selene

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3 hours ago, Jon Letendre said:

Greenspan is in The Gang. He was the first infiltration into Rand’s movement. She was on the right track when she clued-in that he was “just a social climber.”

Jon,

When people first started bashing Greenspan, I defended him. But as time has gone on, I've come to see him as a sellout to elitist crony globalism.

He's no John Galt and Andrea Mitchell, his collectivist propagandist MSNBC fake news wife, is certainly no Dagny.

At best, I consider him an historical figure who's books provide an insider team-member perspective on power insiders. There's some value there, but not much.

Michael

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While Greenspan appears to have been a practicing Keynesian it was a good thing, I speculate, he wasn't a a practicing  Austrian for we've been living totally in the world of fiat money since 1971 when Nixon took the country off the gold standard.

Ideology applied to economics ultimately leads to bad results in the world of central banking. That's because it's economic fascism or socialism. Greenspan couldn't have done a much better job as head of the Federal Reserve. He did get way too loose with the money a couple of times. From the standpoint of an ideology of freedom, however, why did he take that job in the first place? He was a government factotum, something Rand was happy to sanction when President Ford made him his chief economic advisor. Course inertia did the rest.

--Brant

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She was highly flatterable after years of rejection, I forgive her.

He however took a job as a fascist because he is a fascist and is loyal to his fellow fascist gangsters. He is on the same team and answers to the same people that Macron, May, Bushes, Clintons, Soros, Buzzfeed, etc. answer to.

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You want your grandchildren's children to get your money in a hundred years so you divide it into three equal parts and put them into three impregnable boxes and bury them for the future glorious excavation.

Box one contains one million US dollars. Box two contains one million dollars in gold. Box three contains one million dollars in a Vanguard S N P 500 mutual fund.

Assuming general peace and prosperity and political continuity during those hundred years, what will the relative value of the boxes' contents become if each still has some value?

--Brant

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Crypto is going to be mainstream before too long.

Good luck with elitist cronies sewing that up and puttin gatekeepers in place.

When their banking structure crumbles, like everyone and their brother is predicting, crypto will be here. Expect bumps, but also expect a far better money system.

Oh... I forgot...

Greenspan is against crypto...

Michael

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53 minutes ago, Brant Gaede said:

You want your grandchildren's children to get your money in a hundred years so you divide it into three equal parts and put them into three impregnable boxes and bury them for the future glorious excavation.

Box one contains one million US dollars. Box two contains one million dollars in gold. Box three contains one million dollars in a Vanguard S N P 500 mutual fund.

Assuming general peace and prosperity and political continuity during those hundred years, what will the relative value of the boxes' contents become if each still has some value?

--Brant

Gold, there is a worldwide revolution going on. Box one goes to zero. Box two is liquidated one morning, you may get some dollars, buy gold.

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C-Span recently had Greenspan discussing, along with his co-author, his new book "Capitalism in America: A History" Here's the video:

https://www.c-span.org/video/?453097-2/capitalism-america

 

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1 hour ago, Backlighting said:

C-Span recently had Greenspan discussing, along with his co-author, his new book "Capitalism in America: A History" Here's the video:

https://www.c-span.org/video/?453097-2/capitalism-america

 

I leafed  through the book the other day. He glorifies fellow gangsters Rockefeller and Morgan. He’s a full memeber of The Gang.

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On 3/8/2011 at 9:42 PM, Selene said:

Right now, The John Batchelor Radio Show is discussing the Quisling, Alan Greenspan's article and then by reference, they are discussing Ayn Rand and just mentioned that the movie which emphasizes the strike is opening next month.

They are making a reference to the withholding of cash by cur present corporation as a "capital strike" a la Ayn Rand's Strike in Atlas Shrugged.

Fascinating.

Amity Schales and Alan Kudlow are in the discussion with Batchelor.

Adam

Quisling!  That is just about right. 

 

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11 hours ago, Jon Letendre said:

I leafed  through the book the other day. He glorifies fellow gangsters Rockefeller and Morgan. He’s a full memeber of The Gang.

On the surface of it that's just a continuation of Rand who celebrated/defended the "robber barons." In a mixed economy these suckups are inevitable even in the 19th C. 

--Brant

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4 hours ago, Brant Gaede said:

On the surface of it that's just a continuation of Rand who celebrated/defended the "robber barons." In a mixed economy these suckups are inevitable even in the 19th C. 

--Brant

 It is easy to believe she never knew better. It is impossible to believe he didn’t learn better in the decades he rubbed elobws with them.

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On 1/21/2019 at 5:27 PM, Michael Stuart Kelly said:

Crypto is going to be mainstream before too long.

Good luck with elitist cronies sewing that up and puttin gatekeepers in place.

When their banking structure crumbles, like everyone and their brother is predicting, crypto will be here. Expect bumps, but also expect a far better money system.

Oh... I forgot...

Greenspan is against crypto...

Michael

I can't say I'm a big fan of cryptocurrencies. My problem is that they're not anonymous. If they were completely anonymous, I'd be much more likely to get on board.

They can also be lost or hacked.

Still, it's good to have alternatives.

Darrell

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On 1/22/2019 at 6:10 PM, Jon Letendre said:

I leafed  through the book the other day. He glorifies fellow gangsters Rockefeller and Morgan. He’s a full memeber of The Gang.

What do you have against Rockefeller and Morgan?

I have to admit I'm a bit biased, having read a book called "Captains of Industry" when I was a kid that heaped praise on all the 19th century giants. But, I have always been a big fan of those early American capitalists: Vanderbilt, Carnegie, Rockefeller, Morgan, Ford, etc. They probably formed the archetype for some of Ayn Rand's characters like Frank Rearden, Ellis Wyatt and Francisco D'Anconia.

Darrell

 

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34 minutes ago, Darrell Hougen said:

What do you have against Rockefeller and Morgan?

I have to admit I'm a bit biased, having read a book called "Captains of Industry" when I was a kid that heaped praise on all the 19th century giants. But, I have always been a big fan of those early American capitalists: Vanderbilt, Carnegie, Rockefeller, Morgan, Ford, etc. They probably formed the archetype for some of Ayn Rand's characters like Frank Rearden, Ellis Wyatt and Francisco D'Anconia.

Darrell

 

They were all in a cult I have been calling The Gang. And their descendants are continuing the tradition (for example, Anderson Cooper.) They reached the pinnacle by conspiring behind the scenes and subverting the Republic. They conspired to end real money and replace it with debt slavery and the unconstitutional Fed, which their cult controls. They made the Nazis and the CIA. They assassinated JFK, and his son. They are trying to figure out how to assassinate President Trump as I write.

This piece by liberal Canadian Shawn Blair is essential reading, https://www.quora.com/Which-president-in-the-United-States-history-you-think-is-the-smartest

main-qimg-d325ac1ba1f7b0315d979ddbd46200

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1 hour ago, Jon Letendre said:

They were all in a cult I have been calling The Gang. And their descendants are continuing the tradition (for example, Anderson Cooper.) They reached the pinnacle by conspiring behind the scenes and subverting the Republic. They conspired to end real money and replace it with debt slavery and the unconstitutional Fed, which their cult controls. They made the Nazis and the CIA. They assassinated JFK, and his son. They are trying to figure out how to assassinate President Trump as I write.

This piece by liberal Canadian Shawn Blair is essential reading, https://www.quora.com/Which-president-in-the-United-States-history-you-think-is-the-smartest

main-qimg-d325ac1ba1f7b0315d979ddbd46200

Hi Jon,I have trouble believing everything you posted, starting with their connection to the Nazis. It may be difficult to know for certain, but it didn't take long to find an author who contradicts what you quoted above:

Quote
MYTH NO. 1
Adolf Hitler was bankrolled 
by big corporate donors.

In his biography of Henry Kissinger, historian Niall Ferguson notes that "old man Thyssen" — that is, German steel magnate Fritz Thyssen — "bankrolled Hitler." Businessmen such as Thyssen using their financial assets to assist the Nazis was "the mechanism by which Hitler was funded to come to power," according to John Loftus, a former U.S. attorney who prosecuted Nazi war criminals.

But the Nazis were neither "financed" nor "bankrolled" by big corporate donors. During its rise to power, the Nazi Party did receive some money from corporate sources — including Thyssen and, briefly, industrialist Ernst von Borsig — but business leaders mostly remained at arm's length. After all, Nazi economic policy was slippery: pro-business ideas swathed in socialist language. The party's program, the Twenty-Five Points, called for the nationalization of corporations and trusts, revenue sharing, and the end of "interest slavery." Capitalism, the Nazis charged, "enslaves human beings under the slogan of progress, technology, rationalization, standardization, etc."

The party largely depended on grass-roots sources of funding (membership dues, subscriptions to the party press, admission to events and so forth). The Nazi propaganda machine — the dances, the "German evenings," the concerts, the speeches — was also a moneymaking operation, as is made clear in entries in Joseph Goebbels's diary.

 

Darrell

 

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Also, J. P. Morgan died in 1913. So, whatever sins his family committed after his death should not be blamed on him.

John D. Rockefeller died in 1937, 4 years after Hitler rose to power, so there might be some overlap there.

Cornelius Vanderbilt died in 1877.

Andrew Carnegie died in 1919.

The Federal Reserve was created in 1913 under President Woodrow Wilson.

Darrell

 

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Business leaders remained at arm’s length, this person claims, which is contradicted by countless facts.

Oh, dances. Ok.

There will always be someone contradicting the truth, there will never be a shortage of links that “contradict” the truth.

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