Skip to comments.Alan Greenspan: QE Failed To Help The Economy, The Unwind Will Be Painful, "Buy Gold"
Posted on 10/29/2014 11:47:09 AM PDT by Rusty0604
It appears it is time for some Hillary-Clinton-esque backtracking and Liesman-esque translation of just what the former Federal Reserve Chief really meant. As The Wall Street Journal reports, the Fed chief from 1987 to 2006 says the Fed's bond-buying program fell short of its goals, and had a lot more to add.
Mr. Greenspans comments to the Council on Foreign Relations came as Fed officials were meeting in Washington, D.C., and expected to announce within hours an end to the bond purchases.
He said the bond-buying program was ultimately a mixed bag. He said that the purchases of Treasury and mortgage-backed securities did help lift asset prices and lower borrowing costs. But it didnt do much for the real economy.
Effective demand is dead in the water and the effort to boost it via bond buying has not worked, said Mr. Greenspan. Boosting asset prices, however, has been a terrific success.
He observed that history shows central banks can only prick bubbles at great economic cost. Its only by bringing the economy down can you burst the bubble, and that was a step he wasn't willing to take while helming the Fed, he said.
The question of when officials should begin raising interest rates is one of those questions I cannot answer, Mr. Greenspan said.
He also said, I dont think its possible for the Fed to end its easy-money policies in a trouble-free manner....
"Recent episodes in which Fed officials hinted at a shift toward higher interest rates have unleashed significant volatility in markets, so there is no reason to suspect that the actual process of boosting rates would be any different, Mr. Greenspan said.
I think that real pressure is going to occur not by the initiation by the Federal Reserve, but by the markets themselves, Mr. Greenspan he said.
And finally - while CNBC's audience is told what a terrible thing gold is, "The Maestro", having personally created the financial cataclysm the world finds itself in following a lifetime of belief in fiat, Keynesian ideology and "fixing" one bubble with an even greater and more destructive asset bubble, has suddenly had an epiphany and now has a very different message from the one he preached during his decades as the head of the Fed.
Mr. Greenspan said gold is a good place to put money these days given its value as a currency outside of the policies conducted by governments.
What Greenspan failed to add is that it is thanks to his disastrous policies (subsequently adopted by Bernanke and Yellen) that gold is the "place to put money."
And now, paging Scott Nations.
As soon as the election is over they will reinstate it.
A more lucrative plan is to buy a bank, run it into the ground and then collect the bailout money.
This is not new and unknown.
I believe this will not be the catalyst that tanks the economy.
The American people have not rebelled because the bill for our over spending indiscretions has not come due yet.
When the interest rates go up and the government doesn’t have the revenues to cover the costs is when our economy tanks and the revolution starts.
Greenspan is a firm follower of Ayn Rand, and also just happened to be the guy to initiate the greatest expansion of the Fed fiat money, politicized interest rates, and government nanny-state debt ever.
Someone please ask him how he rationalizes this in his mind.
Agree with your comment.
The fake money joyride continues (I believe) because most everybody in govt and finance desperately wants it to.
But eventually somebody will jump up and say “the king has no underwear”
It won’t be pretty.
how could it not fail?
You may be on to something there.
I just wonder how they plan on getting all the money it is taking to care for all the illegals, fight Ebola, bomb Iraq, etc.
must be nice to sit fat and happy and play with people's life long saving and investment with such impunity....of course having your wife on the SCM's side, you're perfectly set.
A stunning admission...
Which is more undervalued, gold or silver?
I’m no expert. But, silver should have been higher during the gold/silver run-up in 2011.
If I was to buy, I would put money in silver.
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