9 ms·

I'm not a gold bug but Alan was a proponent of the gold standard. He wrote about how the gold standard created responsible spending and more equality in the wo

I'm not a gold bug but Alan was a proponent of the gold standard. He wrote about how the gold standard created responsible spending and more equality in the world: https://ritholtz.com/2008/11/gold-and-economic-freedom-by-alan-greenspan/ https://ritholtz.com/2008/11/gold-and-economic-freedom-by-al... The world we are in now, especially in the US, is one where there is near unlimited government credit but it is, according to many, papering over deep structural problems. At some point, these chickens will come home to roost in some way or another. But it is hard to predict when. So he was in favour of the gold standard because it prevented massive unconstrained expansion of credit and that seems sensible.

b40d-48b2-979e 4mo ago
He also oversaw the economy for twenty years before one of the worst recessions in the world. He helped set the stage for multiple disasters with his policies, so I'd take his opinions with a grain of salt.
- bhouston 4mo ago
  It was generally 20 years of growth and the 2008 banking crisis actually happened after he left.
  - b40d-48b2-979e 4mo ago
    And when production for a system I built burns down the month after I leave my job, the next guy they hire was actually the culprit! Greenspan was seen as responsible for the dot-com bust as well which was solidly in the center of his tenure.
    - bhouston 4mo ago
      I think that this was relatively not known as a major risk far in advance otherwise more traders would have gotten rich. Michael Burry only started to short the market in late 2005, four months before Greenspan's term ended. It is hard to ask Greenspan to have super natural powers of foresight beyond just about everyone else.
      - close04 4mo ago
        > It is hard to ask Greenspan to have super natural powers of foresight beyond just about everyone else. From a person in his position the baseline is "more foresight than just about everyone else". That's why they get the big bucks. If you build something grand on wooden legs and massive debt for the next guy to deal with, or drive into a failure mode even if that's not super obvious, it's not high praise.
      - GuinansEyebrows 4mo ago
        hmm, an argument against expertise is not something i expect to see often on hackernews :)
      - asveikau 4mo ago
        This phrase was very popular for a good many years, popularized by Greenspan iirc: https://en.wikipedia.org/wiki/Irrational_exuberance https://en.wikipedia.org/wiki/Irrational_exuberance It described the dotcom bubble, but I seem to recall people were applying it to the 2000s housing market too. Tldr it was not a totally uncommon opinion during either of these bubbles to say there was a bubble going on.
      - shagie 4mo ago
        https://youtu.be/mqicZN7wHtU https://youtu.be/mqicZN7wHtU is the final bit from the Big Short where Mark Baum is to speak before the "legendary, former chairman of the Fed Alan Greenspan" at a financial conference in 2008.
      - nostrademons 4mo ago
        Warren Buffett described derivatives as "financial weapons of mass destruction" in Berkshire's 2002 letter.
    - shagie 4mo ago
      The new IT manager walks into his office. He sits down and goes through his desk and finds three envelopes with the numbers 1, 2, and 3 on them with the attached letter: Congratulations on your new job. To help you out, I've enclosed three pieces of advice to follow when you encounter an intractable problem. Open them in order. A short few months later there was a significant production outage. Things wouldn't work and management was getting angry. After a long day of angry meetings he went to his desk and opened the first letter. It read "Blame it on your predecessor." The next day in the meetings he blamed it on his predecessor and told of all the things that weren't done right... routine patching left undone, documentation in disarray. Upper management grumbled but agreed to give him the time to fix it. Two years later there was another outage. This one went on for a day or two and management was once again getting angry about things and so he went to his desk and pulled out the second letter. "Blame it on the hardware." With that, he went in pointing out that they were years behind on keeping the hardware itself up to date. Upper management grumbled again but agreed to a budget that allowed him to update the hardware. For a while, everything was smooth and then it hit... another outage. He went to his desk and opened the third letter. "Prepare three envelopes."
    - conductr 4mo ago
      There was a stimulus check that went out around that time. I felt it insane that I was receiving a check when nobody in my life was negatively impacted, the economy didn’t seem hurt (no more then when you’re up then down at a blackjack table), it was just a rebalancing of people’s portfolios values. Turns out that started the wave of completely untargeted stimulus/aide that would come at every economic faltering. I wish we would at least try to identify who is in need during these times. It drives me crazy when I would see the lines at Gucci and LV type stores backed up every week a Covid check went out.
      - byronic 4mo ago
        TLDR - Why make it harder for people to get help on the basis that some people might get help who don't deserve it? means testing kills the usefulness of these kinds of stimuli. I completely disagree with your point here and the people buying Gucci/LV are a drop in the bucket compared to, say, Wal-Mart's yearly wage theft statistics. There is no simple means of identifying who is in need and if people get the help who don't need it they can redistribute it if they are morally inclined or do hoarding or w/e; who cares?
        conductr 4mo ago
        There’s no need to make it difficult. All you have to do is publish sensible guardrails and force people to apply for assistance and it would shrink the public cost substantially. I have homeowners insurance, but if my home burns down today I won’t have any reasonable assistance deposited this week. There’s a claim process and I need to have an emergency fund to get my immediate needs met. Everyone should care. The national debt and eventually the nation will crumble based on these decisions to just print massive amounts of money with no real need. I didn’t qualify for any stimulus after that one in 2001 so they are filtering it down and putting up some guardrails. They just need to give this some intent and pre thought. You can claim it’s too difficult when you didn’t even try to have a plan or come up with something that was actually going to good use to assist those in need. Another way to think about it, if Covid was more severe than it was, we’d have wanted those payments to continue for twice or more longer to those in need. But if we were tapped out and had to stop them early, then those in need ultimately succumb to whatever and all the money was spent in vain. I personally believe we shouldn’t socialize every blip. We are just perpetuating this “who cares” mentality and a welfare mentality. Why even have savings or an emergency fund, the government should step in at every turn. It’s a ridiculous stance in my view.
    - dragonwriter 4mo ago
      The dot-com bust produced an EXTREMELY mild recession (so mild that it was often misattributed to 9/11, which occurred when it was almost over. OTOH, there was a lot of pain iny the subsequent expansion leading up to the 2008 , but that was all the fault of fiscal (eepecially tax) policy of the Bush Administration and thei Congressional allies, not Fed monetary policy. While Greenspan clearly ideologically supported the people doing that, it wasn't him and the Fed causing the problems.
      - 59percentmore 4mo ago
        It was "mild" because they rolled the would-be losses into high-risk vehicles and strategies that eventually created the GFC, which included Fed policy to juice asset markets. The Dotcom bubble was the rolling over of the Reagan/Papa Bush-era savings and loan crisis (Greenspan was involved in that, too), and (tinfoil hats on now) a massive bond market liquidity crisis preceded the COVID pandemic flash crash and emergency liquidity injections/stimulus/PPP by a scant few months (and was quietly swept under the rug). We deserve what we get if we don't act on the obvious pattern, at this point. We've spent half a century throwing the public under the bus just so that a few oligarchs don't have to pay out for their bad bets, and Greenspan was absolutely their man for a significant portion of that campaign in the class wars.
  - hylaride 4mo ago
    Alan Greenspan acquired too much power and went out of his way to railroad regulators. It was a classic "absolute power corrupts absolutely" and his flooding the markets with dollar liquidity at every crisis completely destroyed any concepts of moral hazard, of which we are still living with the consequences to this day. He set the stage for the financial crisis that started crumbling a year after he left the fed chair. It wasn't all his fault (politicians lost any spine and bankers any sense), but he was the conductor.
    - jandrese 4mo ago
      He was a believer in the idea that banks would never act against their own long term interests in order to make money quickly because that would be an existential crisis for the bank. Shortly after he left a bank with over 150 years of history collapsed due to exactly that sort of mismanagement, triggering a crisis for the entire banking sector.
- chollida1 4mo ago
  Really? I don't think anyone really holds him responsible for the dotnet crash of 2000 as that was a market issue and irrational exuberance issue and not a monetary one. And 2008 was similar. The Fed doesn't control or have any responsibility for lower lender standards or ARM mortgages. Congress was responsible for the GSE's that bought any mortgages and wrote insurance on those mortgages, so you can't blame the FED for that. Wallstreet are their regulators were responsible for the securitization of mortgages that went bad in 2008, not the FED. At worst you can say they had the wrong monetary policy but that's an opinion and not something that can be said as a fact. Can you flesh out how you feel Greenspan is responsible for 2008?
  - jcranmer 4mo ago
    The chief criticism lies in the "Greenspan put"--the idea that the Fed would just never let asset prices fall, a policy which both bears his name and is noteworthy enough to have a detailed Wikipedia article on it.
  - hylaride 4mo ago
    He actively campaigned against any regulation of derivatives. There is an infamous lunch that he had with Brooksley Born (who was head of the Commodity Futures Trading Commission) in the late 1990s where she attempted to regulate them. The details of the meeting are fuzzy and none of the participants will go on the record to what was said, but the gist is that he said he would fight her tooth and nail. After massive lobbying from Greenspan, as well as Lawrence Summers, congress passed legislation prohibiting her agency from regulating derivatives. She resigned shortly after.
  - CalRobert 4mo ago
    There was a dot net crash too??
  - HeyBigE 4mo ago
    You don't think Greenspan had a major hand in the dot com crash? "In late 1999, the Federal Reserve under Greenspan flooded the financial system with unprecedented liquidity to ward off potential deflationary impacts and cash-hoarding caused by the Y2K bug panic. The Fed expanded the money supply at an annualized rate of 22% in the fourth quarter of 1999." As for the Great Recession, taking the Fed Funds rate from 6.5% to 1.0% and holding it there for a year was the catalyst for driving everyone into the mortgage market looking for returns. And then did not regulate subprime lending or the shadow banking market: "As the housing market boomed, subprime mortgage originations skyrocketed from 8.2% of all mortgages in 2003 to 23.5% in 2006. The Fed possessed the authority under the Home Ownership and Equity Protection Act (HOEPA) to crack down on predatory lending and loose underwriting standards but chose not to act aggressively." "The Fed failed to properly monitor off-balance-sheet vehicles, investment bank leverage, and complex derivatives like mortgage-backed securities (MBS) and collateralized debt obligations (CDOs). Because these instruments developed outside traditional commercial banking oversight, a highly leveraged 'shadow banking' system grew completely unchecked under the Fed's watch." So yeah, the Fed has its fingerprints all over the scene of the crime. Lots of blame to go around though..
- jimbokun 4mo ago
  By the same standard shouldn’t he also get credit for those 20 years of prosperity?
  - OnlyANeurosci 4mo ago
    "He burned the house down, but for a while we were VERY warm and it was good." You don't credit an arsonist with "keeping a homeless person warm" when they set a homeless person on fire...
Arodex 4mo ago
It is well know there weren't deep structural problems at the time of (and caused by) the gold standard... I don't understand why people keep banging about the theoretical advantaged of a gold standard whan it was the default monetary system for centuries and we have firsthand evidence of the problems it causes (and certainly not more equality in the world!). It has been tried by the whole Earth during several generations. If you think, like Greenspan and others, that there ought to be a mechanism to force some monetary restraint on governments, try to think of a new mechanism, because the "old way" wasn't better. We know it. Move on.
- expedition32 4mo ago
  Nixon was running out of money fast- the cold war was expensive.
throw0101d 4mo ago
> He wrote about how the gold standard created responsible spending and more equality in the world: The Gilded Age, which had quite high levels of inequality, occurred when the gold standard was active: * https://en.wikipedia.org/wiki/Gilded_Age https://en.wikipedia.org/wiki/Gilded_Age It should also be noted that the gold standard did not bring any kind of price stability: * https://archive.is/https://www.theatlantic.com/business/archive/2012/08/why-the-gold-standard-is-the-worlds-worst-economic-idea-in-2-charts/261552/ https://archive.is/https://www.theatlantic.com/business/arch... Further, sticking to the gold standard made the Great Depression worse as it reduced flexibility and options of central banks had, and made deflation worse: * https://www.nber.org/papers/w3488 https://www.nber.org/papers/w3488 The sooner countries left the gold standard the sooner they started recovering from the Great Depression: * https://www.nber.org/papers/w27586 https://www.nber.org/papers/w27586
- ETH_start 4mo ago
  [flagged]
- greenavocado 4mo ago
  The Great Depression was caused by France panic hoarding gold https://www.nber.org/papers/w16350 https://www.nber.org/papers/w16350 Semi-ironically France was the reason the US fell off the dollar standard after it panic hoarded gold AGAIN when the French government made one last, massive purchase of gold from the US using US dollars, paying $35/oz. A French warship arrived in New York in early August 1971 to load the gold and bring it back to France. Reckless spending post WW2 was the main reason the US shot itself in the foot and got into this position where they couldn't reasonably pay most clients back and France saw this developing. All in all France managed to deal massive blows to the US economy covertly TWICE within the same century. https://scholarship.law.columbia.edu/cgi/viewcontent.cgi?article=3545&context=faculty_scholarship https://scholarship.law.columbia.edu/cgi/viewcontent.cgi?art...
  - pfdietz 4mo ago
    And then later in the 1930s as world gold flowed into the US (in response to the rise of the Axis) the economy began to recover here. By the end of the war most gold was in the US.
brightball 4mo ago
39 trillion in debt with no Congressional stomach for... - spending cuts - stopping fraud - figuring out how the net worth of people in Congress increases from hundreds of thousands of dollars to 10s or 100s of millions of dollars - addressing wasteful and ineffective programs Given those issues, the only solution will be inflation. The circling the drain moment will hit with the associated welfare programs get a direct staple to inflation itself, so we will spend more to combat inflation, causing more inflation faster. It's not going to be fun.
- conductr 4mo ago
  This ball is already in motion IMO. Inflation numbers aren’t even believable and It’s already not fun.
  - bhouston 4mo ago
    > Inflation numbers aren’t even believable and It’s already not fun For inflation to have an impact on the US debt, it has to be approaching the level at which the US debt is increasing. In the last year, the US debt increased by 7.6%, much higher than inflation.
    - conductr 4mo ago
      > much higher than inflation Was it really though? My statement you quoted was about the trustworthiness of inflation numbers
- bhouston 4mo ago
  Also please add as an option: raise taxes on the wealthy individuals and corporations back. https://inequality.org/article/11-charts-tax-wealthy-corporations-inequality/ https://inequality.org/article/11-charts-tax-wealthy-corpora... This is really ambiguous: "- stopping fraud" And can mean many things. On the right, it often means Somali daycares, on the left it means the underfunding of the IRS so that it doesn't do audits of rich people. I find this to be mostly a distraction: "- figuring out how the net worth of people in Congress increases from hundreds of thousands of dollars to 10s or 100s of millions of dollars" We should ban stock trading by members of the government, the Ro Khanna bill, but while it can be a source of corruption, it isn't a major source of inequality in the US. This is unclear, can you be more specific as it has different answers based on one's partisan leanings: "- addressing wasteful and ineffective programs" I think a lot of the distortion of US policy towards the rich is a result of Citizens United and similar unrestrained lobbying funds.
derf_ 4mo ago
> ...it prevented massive unconstrained expansion of credit and that seems sensible. At the height of the Great Depression (1936), some economists proposed The Chicago Plan to separate the provision of credit from the money supply by eliminating fractional reserve banking, giving better control of the increases and contractions of credit, the elimination of bank runs, and a dramatic reduction in debt. There was a recent (2012) paper from the IMF [1] that seemed to find this actually is pretty sensible, although I do not claim to be smart enough to understand all of the implications. [1] https://www.imf.org/en/publications/wp/issues/2016/12/31/the-chicago-plan-revisited-26178 https://www.imf.org/en/publications/wp/issues/2016/12/31/the...
budsniffer952 4mo ago
Tying the ability to increase the money supply to a metal we have to dig out of the ground is ridiculous. >near unlimited government credit Really? How do we get some? And, beyond that, what do YOU think the limits should be on increasing the money supply by a sovereign nation? A nation becomes wealthy by producing things to sell. Nothing else matters, including debt. But, we live in a world where people want to be rich, but also don't want to use resources, or build, or manufacture things, or run an empire. It's contradictory, and we are starting to see the effects.
- DANmode 4mo ago
  Tying it to our goodwill, military might, and diplomacy seems like it might be a bad long term plan.
mempko 4mo ago
Gold based money, or eras of coinage, historically have been times of war and slavery. The debt system we are in now is far better in a lot of ways. The outcome of what happens depends on the political will deciding where the credit flows.
- jimbokun 4mo ago
  Seems like a non sequitur. What’s the causality of the gold standard leading to slavery?
bko 4mo ago
I have come around to gold. Money shouldn't be dual purposes, we should apply single responsibility principal. Money should refer to some stable (albeit slightly growing by nature) account of measure. Prices should get cheaper. That's a progress dividend. We get better at growing food every year, why shouldn't food get cheaper? Imagine a world in which prices regularly go down. You're a passive beneficiary of technological progress. The argument that prices can't get cheaper or [bad thing will happen] was never very convincing to me. Prices already do get cheaper for large swaths of the economy that have technological progress grow faster than money supply. Cell phones are rapidly depreciating. You can wait 6m to a year and get a significant discount on the latest iPhone version. People don't stop buying iPhones, and Apple doesn't stop investing in iPhones. This is even more true w/ AI models. Investors/companies are burning billions to build tech that will only get cheaper and obsolete in years if not months. So if you were to try to convince me that deflation would reduce investment or spending, tell me why this doesn't apply to tech products that get cheaper every year.
- ramesh31 4mo ago
  >"We get better at growing food every year, why shouldn't food get cheaper? Imagine a world in which prices regularly go down." Because a lot of people earn their living by producing or selling food. Your other necessities don't become more affordable just because food prices go down, but if that's your livelihood it becomes at risk. Food was incredibly cheap during the great depression. There's an amazing quote from the PBS documentary series on it; "A sack of flour cost a nickel, but where were you gonna get a nickel?". Steady, controlled inflation via fiat is the only way to keep a capitalistic economy functioning, because you can't micromanage or control the price of everything, and people need money to live. The real issue is stagnation of wage growth while assets explode. It's the transfer of real wealth from earners to owners that has put us in the current position, not absolute prices.
- throw0101d 4mo ago
  > Prices should get cheaper. Does that include the price of labour? Are you okay with your salary going down? Because the historical record shows that's what happens during deflationary periods: producers of good/services see the price that they can sell things for goes down, and so they insist on their suppliers and inputs—including labour input—reduce their prices as well.
chasil 4mo ago
There isn't enough gold to use as a common currency. As I understand it, all the gold that has ever been mined would fit in a cube the size of a baseball diamond. https://www.businessinsider.com/warren-buffetts-lesson-on-gold-2013-3 https://www.businessinsider.com/warren-buffetts-lesson-on-go... Nixon was responsible for ending the silver standard. https://www.usmoneyreserve.com/news/executive-insights/when-did-us-go-off-silver-standard/ https://www.usmoneyreserve.com/news/executive-insights/when-... https://en.wikipedia.org/wiki/Silver_standard#United_States https://en.wikipedia.org/wiki/Silver_standard#United_States
lenerdenator 4mo ago
Responsibility is not something that the current market players want to see, whether it be through the gold standard, reasonable interest rates, or any other mechanism. They'll argue that the next big thing is simply too expensive for that sort of constraint.
RA_Fisher 4mo ago
The gold standard and metalism generally, leads to all kinds of unproductive panics bc the quantity of money can’t wisely be adjusted to the situation. It’s a bad trade off, bc it’s well-known in the literature that inflation-targeting works (and that’s the current world-wide central bank policy since 1991).
- sokoloff 4mo ago
  It also can’t be unwisely adjusted to the situation (usually in the form “too much for too long”). I tend to think the benefits of unbacked currency exceed the downsides, but it’s not exclusively upside.
  - RA_Fisher 4mo ago
    True, during Covid when blue collar in-person maga unemployment skyrocketed, the Fed could have avoided increasing the money supply. I wish they had, bc we all had to pay the resulting inflation cost. How were thanked for it? Tons of Constitutional law-breaking.
boppo1 4mo ago
I always wondered how someone who wrote that could go on to chair the fed with LIRP policies that fueled crazy asset bubbles.
aunty_helen 4mo ago
There’s no roosting. It’s frog boiling. Every day your money loses value. That’s why stocks go up, spending goes up and the asset class gets richer. When you peg these to an arbitrary “value” you can see, companies aren’t getting trillions of dollars more efficient, the government isn’t delivering more services and the utility of a business or property hasn’t increased.
- deleted 4mo ago
  [deleted]
onraglanroad 4mo ago
Have you ever read Bertrand Russell's critique of the gold standard in his essay The Modern Midas? It's in the collection "In Praise of Idleness". It's worth reading all of them, even if you disagree with most of it.
burnte 4mo ago
> So he was in favour of the gold standard because it prevented massive unconstrained expansion of credit and that seems sensible. That's because it permanently cripples economies by creating an artificial constraint and pretending it's useful. All it does is create another speculation market in gold and cripple credit markets.
itsamario 4mo ago
Big picture is credit gives the individual a chance. That occurred in the 80s and since we've have more go from rags to riches than all of history combined. I hated the system but it's fair. English and the allied forces inherited the western world and nobody was willing to claim it, the king of England gave it to his daughter. Gold should be revalued but we're entering a phase where America is leaving law and order for law and equity. Essentially WW2 is ending but most never bothered to consider if there's a goal to all the chaos.
bluegatty 4mo ago
It's impossible to talk about the supposed benefit of the Gold Standard without saying that it's a completely arbitrary constraint. Basing currency on a shiny rock is the stupidest idea ever, that only happens to work because it plays into the worst of human convictions, which is egosim around fraud and debasement of currency. Gold Standards are like very strong medicine with bad effects. Notably, they would almost assuredly hold back the economy and cause deflationary traps. The economy needs a bit more currency as it expands and that's that.
stephen_g 4mo ago
The gold standard makes zero sense. Why should the amount of money the economy needs have any relation to the amount of gold a country holds? What happens in practice is that you set a conversion rate to account for this, and basically immediately things start to drift further and further out of whack leading to massive distortion. There's a reason the gold standard era was a cycle of big swings of inflation and deflation, with panics, recessions, crashes pretty continually. It's the same with fixed or pegged exchange rates - you can set it to something reasonable at the start but it will always drift, usually until things are distorted that the system fails. That's why we don't have a gold standard anymore and why fixed exchange rates have all mostly failed and gone away too. There's just no reason to believe that pegs to commodities or other currencies would ever correspond to the amount of money that the economy needs to be in circulation, so they always fail.
pjmorris 4mo ago
Margaret Thatcher said "The problem with socialism is that you eventually run out of other people's money." I feel like the problem that Greenspan, Bernanke, and friends have found is that the problem with capitalism is that you never run out of the government's money.

b40d-48b2-979e 4mo ago

He also oversaw the economy for twenty years before one of the worst recessions in the world. He helped set the stage for multiple disasters with his policies, so I'd take his opinions with a grain of salt.

bhouston 4mo ago
It was generally 20 years of growth and the 2008 banking crisis actually happened after he left.
- b40d-48b2-979e 4mo ago
  And when production for a system I built burns down the month after I leave my job, the next guy they hire was actually the culprit! Greenspan was seen as responsible for the dot-com bust as well which was solidly in the center of his tenure.
  - bhouston 4mo ago
    I think that this was relatively not known as a major risk far in advance otherwise more traders would have gotten rich. Michael Burry only started to short the market in late 2005, four months before Greenspan's term ended. It is hard to ask Greenspan to have super natural powers of foresight beyond just about everyone else.
    - close04 4mo ago
      > It is hard to ask Greenspan to have super natural powers of foresight beyond just about everyone else. From a person in his position the baseline is "more foresight than just about everyone else". That's why they get the big bucks. If you build something grand on wooden legs and massive debt for the next guy to deal with, or drive into a failure mode even if that's not super obvious, it's not high praise.
    - GuinansEyebrows 4mo ago
      hmm, an argument against expertise is not something i expect to see often on hackernews :)
    - asveikau 4mo ago
      This phrase was very popular for a good many years, popularized by Greenspan iirc: https://en.wikipedia.org/wiki/Irrational_exuberance https://en.wikipedia.org/wiki/Irrational_exuberance It described the dotcom bubble, but I seem to recall people were applying it to the 2000s housing market too. Tldr it was not a totally uncommon opinion during either of these bubbles to say there was a bubble going on.
    - shagie 4mo ago
      https://youtu.be/mqicZN7wHtU https://youtu.be/mqicZN7wHtU is the final bit from the Big Short where Mark Baum is to speak before the "legendary, former chairman of the Fed Alan Greenspan" at a financial conference in 2008.
    - nostrademons 4mo ago
      Warren Buffett described derivatives as "financial weapons of mass destruction" in Berkshire's 2002 letter.
  - shagie 4mo ago
    The new IT manager walks into his office. He sits down and goes through his desk and finds three envelopes with the numbers 1, 2, and 3 on them with the attached letter: Congratulations on your new job. To help you out, I've enclosed three pieces of advice to follow when you encounter an intractable problem. Open them in order. A short few months later there was a significant production outage. Things wouldn't work and management was getting angry. After a long day of angry meetings he went to his desk and opened the first letter. It read "Blame it on your predecessor." The next day in the meetings he blamed it on his predecessor and told of all the things that weren't done right... routine patching left undone, documentation in disarray. Upper management grumbled but agreed to give him the time to fix it. Two years later there was another outage. This one went on for a day or two and management was once again getting angry about things and so he went to his desk and pulled out the second letter. "Blame it on the hardware." With that, he went in pointing out that they were years behind on keeping the hardware itself up to date. Upper management grumbled again but agreed to a budget that allowed him to update the hardware. For a while, everything was smooth and then it hit... another outage. He went to his desk and opened the third letter. "Prepare three envelopes."
  - conductr 4mo ago
    There was a stimulus check that went out around that time. I felt it insane that I was receiving a check when nobody in my life was negatively impacted, the economy didn’t seem hurt (no more then when you’re up then down at a blackjack table), it was just a rebalancing of people’s portfolios values. Turns out that started the wave of completely untargeted stimulus/aide that would come at every economic faltering. I wish we would at least try to identify who is in need during these times. It drives me crazy when I would see the lines at Gucci and LV type stores backed up every week a Covid check went out.
    - byronic 4mo ago
      TLDR - Why make it harder for people to get help on the basis that some people might get help who don't deserve it? means testing kills the usefulness of these kinds of stimuli. I completely disagree with your point here and the people buying Gucci/LV are a drop in the bucket compared to, say, Wal-Mart's yearly wage theft statistics. There is no simple means of identifying who is in need and if people get the help who don't need it they can redistribute it if they are morally inclined or do hoarding or w/e; who cares?
      - conductr 4mo ago
        There’s no need to make it difficult. All you have to do is publish sensible guardrails and force people to apply for assistance and it would shrink the public cost substantially. I have homeowners insurance, but if my home burns down today I won’t have any reasonable assistance deposited this week. There’s a claim process and I need to have an emergency fund to get my immediate needs met. Everyone should care. The national debt and eventually the nation will crumble based on these decisions to just print massive amounts of money with no real need. I didn’t qualify for any stimulus after that one in 2001 so they are filtering it down and putting up some guardrails. They just need to give this some intent and pre thought. You can claim it’s too difficult when you didn’t even try to have a plan or come up with something that was actually going to good use to assist those in need. Another way to think about it, if Covid was more severe than it was, we’d have wanted those payments to continue for twice or more longer to those in need. But if we were tapped out and had to stop them early, then those in need ultimately succumb to whatever and all the money was spent in vain. I personally believe we shouldn’t socialize every blip. We are just perpetuating this “who cares” mentality and a welfare mentality. Why even have savings or an emergency fund, the government should step in at every turn. It’s a ridiculous stance in my view.
  - dragonwriter 4mo ago
    The dot-com bust produced an EXTREMELY mild recession (so mild that it was often misattributed to 9/11, which occurred when it was almost over. OTOH, there was a lot of pain iny the subsequent expansion leading up to the 2008 , but that was all the fault of fiscal (eepecially tax) policy of the Bush Administration and thei Congressional allies, not Fed monetary policy. While Greenspan clearly ideologically supported the people doing that, it wasn't him and the Fed causing the problems.
    - 59percentmore 4mo ago
      It was "mild" because they rolled the would-be losses into high-risk vehicles and strategies that eventually created the GFC, which included Fed policy to juice asset markets. The Dotcom bubble was the rolling over of the Reagan/Papa Bush-era savings and loan crisis (Greenspan was involved in that, too), and (tinfoil hats on now) a massive bond market liquidity crisis preceded the COVID pandemic flash crash and emergency liquidity injections/stimulus/PPP by a scant few months (and was quietly swept under the rug). We deserve what we get if we don't act on the obvious pattern, at this point. We've spent half a century throwing the public under the bus just so that a few oligarchs don't have to pay out for their bad bets, and Greenspan was absolutely their man for a significant portion of that campaign in the class wars.
- hylaride 4mo ago
  Alan Greenspan acquired too much power and went out of his way to railroad regulators. It was a classic "absolute power corrupts absolutely" and his flooding the markets with dollar liquidity at every crisis completely destroyed any concepts of moral hazard, of which we are still living with the consequences to this day. He set the stage for the financial crisis that started crumbling a year after he left the fed chair. It wasn't all his fault (politicians lost any spine and bankers any sense), but he was the conductor.
  - jandrese 4mo ago
    He was a believer in the idea that banks would never act against their own long term interests in order to make money quickly because that would be an existential crisis for the bank. Shortly after he left a bank with over 150 years of history collapsed due to exactly that sort of mismanagement, triggering a crisis for the entire banking sector.
chollida1 4mo ago
Really? I don't think anyone really holds him responsible for the dotnet crash of 2000 as that was a market issue and irrational exuberance issue and not a monetary one. And 2008 was similar. The Fed doesn't control or have any responsibility for lower lender standards or ARM mortgages. Congress was responsible for the GSE's that bought any mortgages and wrote insurance on those mortgages, so you can't blame the FED for that. Wallstreet are their regulators were responsible for the securitization of mortgages that went bad in 2008, not the FED. At worst you can say they had the wrong monetary policy but that's an opinion and not something that can be said as a fact. Can you flesh out how you feel Greenspan is responsible for 2008?
- jcranmer 4mo ago
  The chief criticism lies in the "Greenspan put"--the idea that the Fed would just never let asset prices fall, a policy which both bears his name and is noteworthy enough to have a detailed Wikipedia article on it.
- hylaride 4mo ago
  He actively campaigned against any regulation of derivatives. There is an infamous lunch that he had with Brooksley Born (who was head of the Commodity Futures Trading Commission) in the late 1990s where she attempted to regulate them. The details of the meeting are fuzzy and none of the participants will go on the record to what was said, but the gist is that he said he would fight her tooth and nail. After massive lobbying from Greenspan, as well as Lawrence Summers, congress passed legislation prohibiting her agency from regulating derivatives. She resigned shortly after.
- CalRobert 4mo ago
  There was a dot net crash too??
- HeyBigE 4mo ago
  You don't think Greenspan had a major hand in the dot com crash? "In late 1999, the Federal Reserve under Greenspan flooded the financial system with unprecedented liquidity to ward off potential deflationary impacts and cash-hoarding caused by the Y2K bug panic. The Fed expanded the money supply at an annualized rate of 22% in the fourth quarter of 1999." As for the Great Recession, taking the Fed Funds rate from 6.5% to 1.0% and holding it there for a year was the catalyst for driving everyone into the mortgage market looking for returns. And then did not regulate subprime lending or the shadow banking market: "As the housing market boomed, subprime mortgage originations skyrocketed from 8.2% of all mortgages in 2003 to 23.5% in 2006. The Fed possessed the authority under the Home Ownership and Equity Protection Act (HOEPA) to crack down on predatory lending and loose underwriting standards but chose not to act aggressively." "The Fed failed to properly monitor off-balance-sheet vehicles, investment bank leverage, and complex derivatives like mortgage-backed securities (MBS) and collateralized debt obligations (CDOs). Because these instruments developed outside traditional commercial banking oversight, a highly leveraged 'shadow banking' system grew completely unchecked under the Fed's watch." So yeah, the Fed has its fingerprints all over the scene of the crime. Lots of blame to go around though..
jimbokun 4mo ago
By the same standard shouldn’t he also get credit for those 20 years of prosperity?
- OnlyANeurosci 4mo ago
  "He burned the house down, but for a while we were VERY warm and it was good." You don't credit an arsonist with "keeping a homeless person warm" when they set a homeless person on fire...

Arodex 4mo ago

It is well know there weren't deep structural problems at the time of (and caused by) the gold standard... I don't understand why people keep banging about the theoretical advantaged of a gold standard whan it was the default monetary system for centuries and we have firsthand evidence of the problems it causes (and certainly not more equality in the world!). It has been tried by the whole Earth during several generations. If you think, like Greenspan and others, that there ought to be a mechanism to force some monetary restraint on governments, try to think of a new mechanism, because the "old way" wasn't better. We know it. Move on.

expedition32 4mo ago
Nixon was running out of money fast- the cold war was expensive.

throw0101d 4mo ago

> He wrote about how the gold standard created responsible spending and more equality in the world: The Gilded Age, which had quite high levels of inequality, occurred when the gold standard was active: * https://en.wikipedia.org/wiki/Gilded_Age https://en.wikipedia.org/wiki/Gilded_Age It should also be noted that the gold standard did not bring any kind of price stability: * https://archive.is/https://www.theatlantic.com/business/archive/2012/08/why-the-gold-standard-is-the-worlds-worst-economic-idea-in-2-charts/261552/ https://archive.is/https://www.theatlantic.com/business/arch... Further, sticking to the gold standard made the Great Depression worse as it reduced flexibility and options of central banks had, and made deflation worse: * https://www.nber.org/papers/w3488 https://www.nber.org/papers/w3488 The sooner countries left the gold standard the sooner they started recovering from the Great Depression: * https://www.nber.org/papers/w27586 https://www.nber.org/papers/w27586

ETH_start 4mo ago
[flagged]
greenavocado 4mo ago
The Great Depression was caused by France panic hoarding gold https://www.nber.org/papers/w16350 https://www.nber.org/papers/w16350 Semi-ironically France was the reason the US fell off the dollar standard after it panic hoarded gold AGAIN when the French government made one last, massive purchase of gold from the US using US dollars, paying $35/oz. A French warship arrived in New York in early August 1971 to load the gold and bring it back to France. Reckless spending post WW2 was the main reason the US shot itself in the foot and got into this position where they couldn't reasonably pay most clients back and France saw this developing. All in all France managed to deal massive blows to the US economy covertly TWICE within the same century. https://scholarship.law.columbia.edu/cgi/viewcontent.cgi?article=3545&context=faculty_scholarship https://scholarship.law.columbia.edu/cgi/viewcontent.cgi?art...
- pfdietz 4mo ago
  And then later in the 1930s as world gold flowed into the US (in response to the rise of the Axis) the economy began to recover here. By the end of the war most gold was in the US.

brightball 4mo ago

39 trillion in debt with no Congressional stomach for... - spending cuts - stopping fraud - figuring out how the net worth of people in Congress increases from hundreds of thousands of dollars to 10s or 100s of millions of dollars - addressing wasteful and ineffective programs Given those issues, the only solution will be inflation. The circling the drain moment will hit with the associated welfare programs get a direct staple to inflation itself, so we will spend more to combat inflation, causing more inflation faster. It's not going to be fun.

conductr 4mo ago
This ball is already in motion IMO. Inflation numbers aren’t even believable and It’s already not fun.
- bhouston 4mo ago
  > Inflation numbers aren’t even believable and It’s already not fun For inflation to have an impact on the US debt, it has to be approaching the level at which the US debt is increasing. In the last year, the US debt increased by 7.6%, much higher than inflation.
  - conductr 4mo ago
    > much higher than inflation Was it really though? My statement you quoted was about the trustworthiness of inflation numbers
bhouston 4mo ago
Also please add as an option: raise taxes on the wealthy individuals and corporations back. https://inequality.org/article/11-charts-tax-wealthy-corporations-inequality/ https://inequality.org/article/11-charts-tax-wealthy-corpora... This is really ambiguous: "- stopping fraud" And can mean many things. On the right, it often means Somali daycares, on the left it means the underfunding of the IRS so that it doesn't do audits of rich people. I find this to be mostly a distraction: "- figuring out how the net worth of people in Congress increases from hundreds of thousands of dollars to 10s or 100s of millions of dollars" We should ban stock trading by members of the government, the Ro Khanna bill, but while it can be a source of corruption, it isn't a major source of inequality in the US. This is unclear, can you be more specific as it has different answers based on one's partisan leanings: "- addressing wasteful and ineffective programs" I think a lot of the distortion of US policy towards the rich is a result of Citizens United and similar unrestrained lobbying funds.

derf_ 4mo ago

> ...it prevented massive unconstrained expansion of credit and that seems sensible. At the height of the Great Depression (1936), some economists proposed The Chicago Plan to separate the provision of credit from the money supply by eliminating fractional reserve banking, giving better control of the increases and contractions of credit, the elimination of bank runs, and a dramatic reduction in debt. There was a recent (2012) paper from the IMF [1] that seemed to find this actually is pretty sensible, although I do not claim to be smart enough to understand all of the implications. [1] https://www.imf.org/en/publications/wp/issues/2016/12/31/the-chicago-plan-revisited-26178 https://www.imf.org/en/publications/wp/issues/2016/12/31/the...

budsniffer952 4mo ago

Tying the ability to increase the money supply to a metal we have to dig out of the ground is ridiculous. >near unlimited government credit Really? How do we get some? And, beyond that, what do YOU think the limits should be on increasing the money supply by a sovereign nation? A nation becomes wealthy by producing things to sell. Nothing else matters, including debt. But, we live in a world where people want to be rich, but also don't want to use resources, or build, or manufacture things, or run an empire. It's contradictory, and we are starting to see the effects.

DANmode 4mo ago
Tying it to our goodwill, military might, and diplomacy seems like it might be a bad long term plan.

mempko 4mo ago

Gold based money, or eras of coinage, historically have been times of war and slavery. The debt system we are in now is far better in a lot of ways. The outcome of what happens depends on the political will deciding where the credit flows.

jimbokun 4mo ago
Seems like a non sequitur. What’s the causality of the gold standard leading to slavery?

bko 4mo ago

I have come around to gold. Money shouldn't be dual purposes, we should apply single responsibility principal. Money should refer to some stable (albeit slightly growing by nature) account of measure. Prices should get cheaper. That's a progress dividend. We get better at growing food every year, why shouldn't food get cheaper? Imagine a world in which prices regularly go down. You're a passive beneficiary of technological progress. The argument that prices can't get cheaper or [bad thing will happen] was never very convincing to me. Prices already do get cheaper for large swaths of the economy that have technological progress grow faster than money supply. Cell phones are rapidly depreciating. You can wait 6m to a year and get a significant discount on the latest iPhone version. People don't stop buying iPhones, and Apple doesn't stop investing in iPhones. This is even more true w/ AI models. Investors/companies are burning billions to build tech that will only get cheaper and obsolete in years if not months. So if you were to try to convince me that deflation would reduce investment or spending, tell me why this doesn't apply to tech products that get cheaper every year.

ramesh31 4mo ago
>"We get better at growing food every year, why shouldn't food get cheaper? Imagine a world in which prices regularly go down." Because a lot of people earn their living by producing or selling food. Your other necessities don't become more affordable just because food prices go down, but if that's your livelihood it becomes at risk. Food was incredibly cheap during the great depression. There's an amazing quote from the PBS documentary series on it; "A sack of flour cost a nickel, but where were you gonna get a nickel?". Steady, controlled inflation via fiat is the only way to keep a capitalistic economy functioning, because you can't micromanage or control the price of everything, and people need money to live. The real issue is stagnation of wage growth while assets explode. It's the transfer of real wealth from earners to owners that has put us in the current position, not absolute prices.
throw0101d 4mo ago
> Prices should get cheaper. Does that include the price of labour? Are you okay with your salary going down? Because the historical record shows that's what happens during deflationary periods: producers of good/services see the price that they can sell things for goes down, and so they insist on their suppliers and inputs—including labour input—reduce their prices as well.

chasil 4mo ago

There isn't enough gold to use as a common currency. As I understand it, all the gold that has ever been mined would fit in a cube the size of a baseball diamond. https://www.businessinsider.com/warren-buffetts-lesson-on-gold-2013-3 https://www.businessinsider.com/warren-buffetts-lesson-on-go... Nixon was responsible for ending the silver standard. https://www.usmoneyreserve.com/news/executive-insights/when-did-us-go-off-silver-standard/ https://www.usmoneyreserve.com/news/executive-insights/when-... https://en.wikipedia.org/wiki/Silver_standard#United_States https://en.wikipedia.org/wiki/Silver_standard#United_States

lenerdenator 4mo ago

Responsibility is not something that the current market players want to see, whether it be through the gold standard, reasonable interest rates, or any other mechanism. They'll argue that the next big thing is simply too expensive for that sort of constraint.

RA_Fisher 4mo ago

The gold standard and metalism generally, leads to all kinds of unproductive panics bc the quantity of money can’t wisely be adjusted to the situation. It’s a bad trade off, bc it’s well-known in the literature that inflation-targeting works (and that’s the current world-wide central bank policy since 1991).

sokoloff 4mo ago
It also can’t be unwisely adjusted to the situation (usually in the form “too much for too long”). I tend to think the benefits of unbacked currency exceed the downsides, but it’s not exclusively upside.
- RA_Fisher 4mo ago
  True, during Covid when blue collar in-person maga unemployment skyrocketed, the Fed could have avoided increasing the money supply. I wish they had, bc we all had to pay the resulting inflation cost. How were thanked for it? Tons of Constitutional law-breaking.

boppo1 4mo ago

I always wondered how someone who wrote that could go on to chair the fed with LIRP policies that fueled crazy asset bubbles.

aunty_helen 4mo ago

There’s no roosting. It’s frog boiling. Every day your money loses value. That’s why stocks go up, spending goes up and the asset class gets richer. When you peg these to an arbitrary “value” you can see, companies aren’t getting trillions of dollars more efficient, the government isn’t delivering more services and the utility of a business or property hasn’t increased.

deleted 4mo ago
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onraglanroad 4mo ago

Have you ever read Bertrand Russell's critique of the gold standard in his essay The Modern Midas? It's in the collection "In Praise of Idleness". It's worth reading all of them, even if you disagree with most of it.

burnte 4mo ago

> So he was in favour of the gold standard because it prevented massive unconstrained expansion of credit and that seems sensible. That's because it permanently cripples economies by creating an artificial constraint and pretending it's useful. All it does is create another speculation market in gold and cripple credit markets.

itsamario 4mo ago

Big picture is credit gives the individual a chance. That occurred in the 80s and since we've have more go from rags to riches than all of history combined. I hated the system but it's fair. English and the allied forces inherited the western world and nobody was willing to claim it, the king of England gave it to his daughter. Gold should be revalued but we're entering a phase where America is leaving law and order for law and equity. Essentially WW2 is ending but most never bothered to consider if there's a goal to all the chaos.

bluegatty 4mo ago

It's impossible to talk about the supposed benefit of the Gold Standard without saying that it's a completely arbitrary constraint. Basing currency on a shiny rock is the stupidest idea ever, that only happens to work because it plays into the worst of human convictions, which is egosim around fraud and debasement of currency. Gold Standards are like very strong medicine with bad effects. Notably, they would almost assuredly hold back the economy and cause deflationary traps. The economy needs a bit more currency as it expands and that's that.

stephen_g 4mo ago

The gold standard makes zero sense. Why should the amount of money the economy needs have any relation to the amount of gold a country holds? What happens in practice is that you set a conversion rate to account for this, and basically immediately things start to drift further and further out of whack leading to massive distortion. There's a reason the gold standard era was a cycle of big swings of inflation and deflation, with panics, recessions, crashes pretty continually. It's the same with fixed or pegged exchange rates - you can set it to something reasonable at the start but it will always drift, usually until things are distorted that the system fails. That's why we don't have a gold standard anymore and why fixed exchange rates have all mostly failed and gone away too. There's just no reason to believe that pegs to commodities or other currencies would ever correspond to the amount of money that the economy needs to be in circulation, so they always fail.

pjmorris 4mo ago

Margaret Thatcher said "The problem with socialism is that you eventually run out of other people's money." I feel like the problem that Greenspan, Bernanke, and friends have found is that the problem with capitalism is that you never run out of the government's money.